Stocks to buy

Green hydrogen is arguably one of the cleanest energy sources and has sparked interest in buying hydrogen stocks. As the world pushes towards net zero, wagering on hydrogen could be one of the most lucrative opportunities for long-term investors.

Currently, hydrogen represents a meager 0.1% of the global energy mix. However, to achieve net zero within the next 27 years, this figure needs to grow to 10%. Goldman Sachs analysts predict clean hydrogen is critical in reducing emissions, potentially transforming into a trillion-dollar market by 2050. This outlook alone solidifies the case for investing in promising hydrogen stocks.

Furthermore, the Biden Administration embraces hydrogen for various applications, including vehicles, manufacturing, and electricity generation.

Having said that, let’s look at the top hydrogen stocks to buy for May, holding significant potential for savvy investors.

Hydrogen Stocks to Buy: Plug Power (PLUG)

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Plug Power (NASDAQ:PLUG) is ambitiously carving out a niche in the growing green hydrogen ecosystem with a comprehensive strategy that covers production, storage, delivery, and energy generation. Moreover, it boasts an impressive roster of customers, including retail giants Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), among other top businesses that have positioned the firm as a leader in its niche. Additionally, strategic partnerships with multiple businesses enable the firm to ensure a robust supply chain with swift market penetration for hydrogen across the North American region. It has successfully deployed over 60,000 fuel cell systems for forklifts, establishing over 180 fueling stations.

Of late, though, Plug Power has hit a rough patch, reporting a larger-than-anticipated loss during the first quarter, with its 2023 revenue forecast falling short of analyst expectations. The company management candidly addressed the fuel margin pressures during the first quarter, attributing it to the escalated hydrogen molecule costs due to soaring natural gas prices and supplier disruptions. Nevertheless, the firm remains optimistic, citing ongoing interest from potential strategic partners that could expedite the development of their next generation of hydrogen plants. Moreover, with its stock down by more than 40% last year, there’s plenty of upside ahead with PLUG stock.

Bloom Energy (BE)

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Bloom Energy (NYSE:BE) is arguably the most innovative name on this list. It has established its presence in the stationary fuel cell market, boasting an extraordinary 80% market share in the U.S.  Its fuel cells are predominantly deployed with natural gas, given the global scarcity of hydrogen infrastructure.

However, the firm is investing heavily in research and development, looking to unlock hydrogen’s full potential as a fuel source for its fuel cells. Its robust approach ensures a smooth transition between natural gas, hydrogen, or even a blend of both. Meanwhile, the company also produces and sells cutting-edge Solid Oxide Electrolysis Cells (SOECs) for hydrogen production.

According to Precedence Research, the market for hydrogen fuel cells could grow by a whopping 60.1% CAGR from 2022 to 2030 to $131.06 billion. The firm has already struck major partnerships overseas for its hydrogen fuel cells and electrolyzers, the most noteworthy being with South Korean telecom giant SK.

As we advance, the firm is expected to remain in hyper-growth mode, bolstering its already impressive $10 billion backlog.

Defiance Next Gen H2 ETF (HDRO)

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Perhaps the best way to invest in a risky sector such as hydrogen is through an exchange-traded fund (ETF), such as the Defiance Next Gen H2 ETF (NYSEARCA:HDRO). This powerhouse ETF provides strong exposure to industry leaders while keeping costs minimal. In fact, with an expense ratio of just 0.3%, the HDRO ETF trades at under $10 per share.

Investors embracing the HDRO ETF can effectively gain access to a diverse array of stocks, including the ones mentioned in the article, along with other major players. These include Ballard Power Systems (NASDAQ:BLDP), FuelCell Energy (NASDAQ:FCEL), ITM Power (OTCMKTS:ITMPF), and numerous others. Moreover, to gain a spot in this ETF, Defiance ETFs mandate that the company generate at least 50% of its sales from hydrogen and fuel cell projects or develop fuel cells or hydrogen sources. As a result, the HDRO ETF serves as a potent vehicle for investors seeking exposure to the burgeoning hydrogen economy.

On the date of publication, Muslim Farooque 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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.