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Hydrogen – brave new world or a pipedream?

Former City analyst Robin Hardy concludes his examination of the hydrogen sector by casting his net worldwide
Hydrogen – brave new world or a pipedream?

We conclude our look at the green hydrogen (GH2) and fuel cell energy sub-sector with a look at a broader spread of international stocks operating in this space. In our previous articles we looked in depth at the leading UK-listed stocks Ceres Power (CWR) and ITM Power (ITM). One conclusion we reached was that this sector was at such a nascent stage and profitability was still so far out, anyone looking to invest here needed to take a portfolio approach and hold a number of stocks by size, location and technology bias. In this piece we offer brief profiles of half a dozen more stocks that could help form the basis of a portfolio that is more likely to capture the best investment gains from this very interesting area of green energy and de-carbonisation. We also take a tangential look at exposure to hydrogen et al.

US stocks

North American listed green energy stocks have seen even larger falls than the technology sector, unsurprising as end markets here remain tiny, many business models remain largely unproven, profitability is in the blue yonder, alternative power solutions are myriad and there is a seemingly endless stream of new stocks, the latter making competition for vital capital more intense. Distant profitability means reliance on DCF models for valuation (we have seen some racy assumptions used for long-term growth) and with benchmark yields now past 3 per cent (a six-fold increase in 18 months) pushing up discount rates, sustaining valuations has been near impossible. Investors are still edgy as evidenced by Plug Power’s precipitous fall on its recent quarterly figures.

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