JPMorgan says hydrogen use is set to boom and picks its top stocks to cash in

Published Thu, Jan 20 202211:12 PM ESTUpdated Fri, Jan 21 20225:52 AM EST

JPMorgan has named its top hydrogen picks to play the clean energy trend — including three stocks it says could increase by over 100%. While hydrogen stocks significantly underperformed the market in 2021, the bank still sees hydrogen as a long-term investment opportunity as it becomes an increasingly important part of the energy mix, analysts, led by Jean-Xavier Hecker, said on Jan. 17. Hecker noted that 26 countries now have national hydrogen strategies in place — with 13 launched in 2021 alone. Europe has also established the foundations for a bloc-wide hydrogen market, while a "positive policy landscape" will help drive hydrogen transition in the U.S, Hecker added. JPMorgan acknowledged that the cost for so-called green hydrogen remains high, but added that economies of scale and technological advancement will make hydrogen application economical in 10-15 years. Hydrogen can be produced via a process called electrolysis — which splits water into hydrogen and oxygen — and if renewable energy is used to power the electrolysis, some call it green hydrogen. Currently, the vast majority of hydrogen is still made using fossil fuels , but analysts think this could be about to shift given the growing international focus on climate change . Stock picks One of the bank's top picks in this space is U.S-based Hyzon Motors . Hecker said the pure-play hydrogen mobility company is an early leader in advanced fuel-cell technology and is poised to disrupt the rapidly growing fuel-cell electric vehicle (FCEV) market. The company's technology also has potential for broader applications beyond transportation, he added. The bank has a price target of $10 on the stock, representing a potential upside of 108% to the stock's closing price of around $4.80 on Jan. 18. Hydrogen fuel-cell maker Plug Power also makes JPMorgan's list, with the bank predicting "very strong growth and profitability" as the company expands into new markets and into the green hydrogen space. The bank said the company has a market opportunity valued at more than $200 billion, with the company expecting revenue to grow 50% to reach about $3 billion by 2025, as well as earnings before interest, taxes, depreciation and amortization to hit more than $600 million by the same year. The bank has ascribed a price target of $52 on the stock, implying a 128% potential upside to the stock's closing price of around $22.80 on Jan. 18. The bank also likes California-based Bloom Energy for its "multiple growth drivers" and the wide adoption of the company's products among some of America's largest companies, Hecker said. "We think [the stock] is attractively valued in the context of [the company's] massive growth opportunity, record backlog, and the earnings surge we anticipate with scale over the next few years," Strouse added. The bank has a price target of $38 on the stock, which closed at around $17 on Jan. 18 — an implied potential upside of 123%. Chinese state-owned firm Beijing SinoHytec is another of the bank's picks. The bank said the company enjoys a "valuation premium" as the only fuel-cell electric vehicle pure play in China's domestic stock market and should benefit from exposure to rapid growth in the market, Hecker said. JPMorgan has a price target of 370 Chinese yuan ($58.30) on the stock, which closed at around 243 Chinese yuan on Jan. 18, representing a potential upside of 52%. Rounding off JPMorgan's list is South Korea-listed manufacturer Doosan Fuel Cell , for which the bank has a price target of 60,000 South Korean won ($50.30). The stock closed at 40,500 South Korean won on Jan. 18, implying a potential upside of 48%.

Tanks of hydrogen stand near a hydrogen electrolysis plant.

Bloomberg | Bloomberg | Getty Images

JPMorgan has named its top hydrogen picks to play the clean energy trend — including three stocks it says could increase by over 100%.

NEXT PRO TALK

Today

Wed, July 6 2022 - 12:00pm

CNBC PRO Talks: Top tech investor and analyst Gene Munster provides stock picks and strategy for the beaten-up sector

More In Pro Insight

These stocks could be like 'summer rentals,' where investors move in and move out

Patti Domman hour ago

‘Dividend aristocrats': Strategists name high-yielding stocks to ride out a bear market

Weizhen Tan

VIDEO11:25

Tesla, Nvidia, and Roblox are some of today's stocks: Pro Market Movers July 5

Joshua Natoli