The world of finance, where green energy is the new golden goose. Governments globally are wholeheartedly embracing sustainability, steering industries toward electric vehicles and renewable energy sources. Among these, hydrogen stocks are shining bright, offering a glimpse of a lucrative future.
The evolution of renewable energy technology is ever-evolving, spurred by the ongoing global energy shift. This burgeoning sector presents a promising opportunity for investors seeking substantial returns. However, not all hydrogen stocks are created equal.
Today, we delve into three hydrogen stock picks that stand out as frontrunners in the race for exceptional returns. Our stringent criteria include a buy rating or higher from analysts and a minimum 10% growth in full-year net income, based on the most recent annual reports.
The Rise of Calumet Specialty Products Partners (CLMT)
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Into the limelight steps Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT), renowned for its specialty in hydrocarbon products. The company’s subsidiary, Montana Renewables, spearheads its foray into the renewable energy domain, emerging as the largest sustainable aviation fuel (SAF) producer in the Western Hemisphere, with an impressive annual production capacity of 30 million gallons.
Calumet’s operations revolve around three key divisions:
- Specialty Products and Solutions: Crafting waxes, gels, petrolatums, and more.
- Renewables: Generating renewable hydrogen, diesel, and sustainable aviation fuel (SAF).
- Performance Brands: Marketing TruFuel, Royal Purple, and Bel-Ray brands.
Recently, Calumet bounced back to profitability, posting a net income of $48.1 million in FY’23 compared to a substantial loss of $173.3 million the prior year, denoting an impressive 128% year-over-year improvement. However, adjusted EBITDA declined from $390 million to $260.5 million, attributed to weather disruptions and a temporary shutdown of its Montana Renewables refinery due to technical issues.
With analysts backing CLMT stock as a buy, fueled by its climbing financials and promising outlook, Calumet emerges as a beacon among hydrogen stock picks, beckoning investors towards potential prosperity.
The Resilience of AES (AES)
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Embracing change with open arms, AES (NYSE: AES), a Virginia-based power utility company with a global presence across 15 countries, including the Netherlands, the Philippines, and Vietnam, is a true bastion of resilience. Engaged in energy infrastructure, green hydrogen, and other renewable assets, AES forges ahead in the energy revolution.
Teaming up with AI Fund, AES ventures into collaborative territory to spearhead innovation in renewable energy. This strategic partnership aims to incubate companies dedicated to leveraging artificial intelligence to tackle contemporary energy dilemmas.
While FY’23 showed a modest uptick in revenue from $12.6 billion to $12.7 billion, AES made significant strides in trimming its net losses from $505 million in FY’22 to $182 million, marking a commendable 64% improvement. Notable losses stemmed from the company’s phased exit from coal-generated power, incurring costs amounting to $1.1 billion.
The commitment to transitioning towards a greener energy spectrum underscores AES’s dedication to reducing carbon footprints, bolstering its position as a top contender among hydrogen stocks. Surpassing projected targets, the company achieved an adjusted EPS of $1.76, eclipsing expectations.
“In 2023, AES witnessed unprecedented success in both operational efficiency and financial performance,” asserts CEO and President Andrés Gluski. “We exceeded virtually all strategic goals, doubling renewables construction to 3.5 GW and securing 5.6 GW in new Power Purchase Agreements.”
Analysts sing praises of AES, adorning the hydrogen stock with a coveted strong buy rating. With the horizon aglow, perhaps it’s time for investors to seize the opportunity presented by AES before the masses follow suit.
Dazzling Performance of Linde PLC (LIN)
The Rise of Linde plc in the Hydrogen Market
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If hydrogen stock picks were a poker game, Linde plc (NASDAQ:LIN) would be the royal flush; the apex predator amidst beasts. Specializing in various technologies and industrial gases for critical industrial applications, Linde stands as an indomitable leader in capturing industrial gases.
Partnership Power
Linde has forged formidable alliances with industry giants like IndianOil, Celanese, and Steel Authority of India Limited (SAIL), solidifying its foothold in the market. Recently, the illustrious H2 Green Steel joined the ranks, propelling Linde to construct an on-site air separation unit to aid in emissions reduction at the integrated plant.
Financial Fortitude
In its FY’23 report, Linde PLC flaunted a mixed bag of results. While overall sales dipped by 2% year-over-year to $32.9 billion, underlying sales ticked up by a commendable 5%. Not to be outdone, the company boasted a colossal total project backlog of $8.5 billion, a testament to its prowess. Net income soared to $6.2 billion, marking a 52% surge from the prior year’s $4.1 billion.
Market Majesty
Basking in the glory of S&P 500 Dividend Aristocrats Index inclusion, Linde is a beacon of stability, having increased dividend payments for over 25 years. Its annual payout of $5.56 translates to a modest 1.28% yield, a gesture of appreciation to investors that echoes through the sultanate of stocks.
Analyst Acclaim
With a choir of 21 analysts singing its praises, Linde (LIN) emerges as a melody of promise in the hydrogen market choir. Amidst the cacophony of varied stock performances, Linde’s tune remains harmonious; a crescendo of success waiting to be heard.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.