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The switch to hydrogen could raise these 3 actions more
In a report on the alternative fuels market, analyst Rupert Merer, from the National Bank of Canada, analyzes the possibilities and potential of hydrogen as an energy resource and as a basic product. At the heart of the matter, he writes, “Stakeholders in energy markets have reached consensus that climate change is a problem and that decarbonizing our energy supply mix will require a multifaceted approach that includes H2. It is estimated that H2 could supply between 15% and 25% of global energy needs … “Merer adds, of the potential benefits of hydrogen,” H2 has the ability to reduce emissions in sectors where decarbonization is a challenge , such as cargo logistics, collective transport and industrial heating ”. So what is hydrogen and why is it important? Hydrogen is the most abundant element in the observable universe and is a common building block in complex organic molecules. It is found in both wood and petroleum products (there is a reason they are commonly called hydrocarbons) and, along with oxygen, it is part of the ordinary water molecule. Without hydrogen, life as we know it would not be possible. With this in mind, using the TipRanks database, we zeroed in on three stocks that some of the top Wall Street analysts have leveraged to profit in the growing hydrogen environment. Ballard Power Systems (BLDP) The first stock on the list is Ballard Power Systems, a hydrogen fuel cell manufacturer based in British Columbia, Canada. The company focuses on proton exchange membrane technology, one of several competing technologies in the hydrogen fuel cell market. Ballard’s PEM fuel cells are distributed around the world and to date the company has produced and shipped more than 400MW of fuel cell products. Ballard fuel cells are used in transportation technology to enable fully electric buses, commercial trucks, trains, and forklift vehicles. Like many manufacturers that depend on the transportation industry, this has been a difficult year for Ballard. The disruptions caused by the coronavirus have affected the company in two directions: first, the usual errors in supply and distribution chains, but also, Ballard markets its products to commercial users, who have also been blocked due to the corona. In short, Ballard saw revenue drop in the first part of 2020 and they have yet to recover. Third quarter revenue was $ 25.6 million, in line with the first and second quarters of the year. However, Ballard’s share price has risen and risen throughout the year, despite some periods of short-term volatility. Overall, stocks have grown 170% so far this year. The earnings show the prestige of hydrogen in a market that actively seeks renewable, less polluting and zero emissions energy sources. Hydrogen checks all three boxes. Covering Ballard for Roth Capital, 5-star analyst Craig Irwin sees the company in a strong position for rapid future growth. “BLDP exited 3Q20 with $ 361 million in cash and no debt, and with only $ 100 million- $ 120m of capital needed to generate positive earnings. Mgmt was clear that it intends to more actively assess M&A objectives across all H2 and FC value chains. […] We remain optimistic about LT’s increase in revenue supported by China FC’s new subsidy program, and we would be buyers in any weakness, “Irwin opined. To this end, Irwin rates BLDP as a Buy, and its price target of $ 25 means room for 29% growth in 2021. (To view Irwin’s track record, click here) Wall Street broadly agrees with this analysis. In recent months, BLDP has received 3 Buy and 1 Hold ratings. Street analysts. With an average price target of $ 24 per share, the potential upside is ~ 24%. (See BLDP stock analysis on TipRanks) Air Products and Chemicals (APD) Air Products and Chemicals is primarily known as a supplier of industrial gases, making it a natural product for the hydrogen industry. In its pure form, hydrogen is gaseous under ‘normal’ conditions. APD earlier this year capitalized on that natural fit. ural and contracted the acquisition of 5 hydrogen production plants in an agreement worth $ 530 million. Along with the new plants, APD also sealed its position as a major hydrogen supplier for PBF Energy. APD’s acquisitions show that it is serious about becoming a long-term supplier to the hydrogen industry. APD is already a major supplier to hydrogen refineries, providing a pure gas that can be used as in transportation fuel technology. In recent fiscal 4Q20, APD did not meet earnings targets, but beat revenue forecasts. The top line for FQ4 reached $ 2.32 billion, up 2% year-over-year and also 2% above estimates. Argus analyst Bill Selesky likes APD’s overall position in the market, noting: “Despite the weak fiscal 4Q20 results due to the pandemic, we believe performance will begin to improve. We also believe APD is extremely well positioned to manage during this period due to its stable cash flows, below-average debt and investment grade credit rating. ” Selesky gives APD’s stock a target price of $ 360, suggesting 33% growth going forward. and maintains a Buy rating on the stock. (To view Selesky’s track record, click here) Air Products has 11 recent reviews, dividing 10-to-1 into buys and holds, and giving the stock an analyst consensus rating of Strong Buy. The average price target is $ 311.10, indicating a potential 15% upside from current levels. (See APD stock analysis on TipRanks) BP PLC (BP) Last but not least is BP, the oil giant. This company has a reputation within the industry as a leader in moving towards non-oil renewable energy sources, and has carried out initiatives in wind, solar and hydrogen in the past. Last year, the company joined the Global Hydrogen Council. As a major player in the natural gas market, BP is well positioned to also become a supplier of ‘blue’ hydrogen or H2 derived from natural gas sources. BP is also carrying out a project at its Lingen refinery in northwestern Germany, converting the facility to produce hydrogen from water. The project is in collaboration with Orsted, and when it is fully online in 2024 it will be able to produce up to one metric ton of clean hydrogen per hour. Taking the lead in the renewable energy market is one way BP is moving to shore up. your future position. The hydrocarbon industry will not last forever and 2020 has been a particularly difficult year. Stocks are down 36% year-to-date and quarterly revenue has dropped from $ 74 billion in the first quarter to $ 44 billion in the third quarter. However, in the third quarter, the company posted a net profit of $ 100 million, after heavy losses in the second quarter. Sam Margolin, a five-star analyst at Wolfe Research, wrote about BP after the quarterly report: “Our instinct is that the underlying story of O&G is more influential for short-term equity performance, although Lingen’s announcement is positive for BP as it reflects the company’s ability to partner with industry leaders to advance its zero net plan. ” Margolin is bullish on BP, and her stance comes with superior performance (ie Buy). Its price target of $ 31 implies a 41% rise in the next year. (To view Margolin’s history, click here) Overall, BP has a Moderate Buy rating from analyst consensus, based on 6 reviews including 4 purchases and 2 holds. The shares are selling for $ 21.94 and the average target price of $ 29.80 suggests room for a potential upside of 36% in the next 12 months. (Check out BP’s stock analysis on TipRanks) To find good ideas for hydrogen stocks trading at attractive valuations, visit TipRanks Best Stocks to Buy, a recently launched tool that brings together all of TipRanks stock insights. only those of leading analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
