Revolutionizing Energy: The Rise of Hydrogen Power
As the world shifts towards cleaner, greener alternatives, hydrogen power stands out as a beacon of hope. Produced using renewable energy sources like wind and solar, hydrogen fuel can power engines with water as its sole byproduct. Despite its ideal credentials, the industry has faced significant hurdles, including high production costs and infrastructure challenges. However, as technology advances and economic conditions improve, the tide is turning in favor of hydrogen.
The Hydrogen Fuel Cell Market: A Promising Future
Fortune Business Insights predicts the hydrogen fuel cell market will grow at an impressive 30% compound annual growth rate (CAGR) from 2024 to 2032. Similarly, Research Nester expects the hydrogen vehicle market to expand at a remarkable 45% CAGR from 2025 to 2037. While these estimates should be viewed with caution, they suggest a promising future for companies operating in this space.
Two Undervalued Stocks to Watch
Plug Power (NASDAQ: PLUG) and Nikola (NASDAQ: NKLA) are two hydrogen-focused companies that could benefit from the growing demand for clean energy solutions.
Plug Power: A Leader in Hydrogen Fuel Cells
Plug Power provides hydrogen fuel cells and charging services for forklifts in warehouses and fulfillment centers. With over 69,000 fuel cell systems and 250 fueling stations deployed, it’s the largest single buyer of liquid hydrogen. Despite struggling in recent years, Plug Power’s revenue rose 40% in 2022 and 27% in 2023, driven by strategic acquisitions. Analysts expect its revenue to grow at a CAGR of 25% from 2023 to 2026, narrowing its net losses. With an enterprise value of $2.67 billion, Plug’s stock appears undervalued at 2.3 times next year’s sales.
Nikola: Electric Semi-Trucks with a Hydrogen Twist
Nikola produces electric semi-trucks, initially focusing on battery-powered electric trucks (BEVs) before shifting to hydrogen fuel-cell electric trucks (FCEVs). Despite a rocky start, Nikola has delivered 203 FCEVs in the first nine months of 2024 and expects to deliver 300-350 FCEVs for the full year. Analysts predict its revenue will more than triple to $112 million in 2024 and nearly triple again to $328 million in 2025. With an enterprise value of $338 million, Nikola’s stock looks attractively priced at roughly 1 time next year’s sales.
A New Era for Hydrogen Power
As the world transitions towards cleaner energy sources, companies like Plug Power and Nikola are poised to benefit from growing demand. With their undervalued stocks and promising growth prospects, they could be attractive additions to any portfolio.
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