We recently compiled the 10 Best Hydrogen and Fuel Cell Stocks to Buy. In this article, we are going to take a look at DuPont de Nemours, Inc. (NYSE:DD) against the other hydrogen and fuel stocks.
Global Warming Driving the Hydrogen Market
As of 2024, climate change has become an increasingly significant issue globally, as June in 2024 was the warmest month in the 175 year old history of NOAA National Centers for Environmental Information’s data record. Since carbon emissions is one of the driving factors for such a massive global impact, hydrogen, one of the biggest green & clean energy sources, is expected to see an upward trajectory in its market growth in the coming years. As such, its production and consumption are on the rise.
Therefore, the global hydrogen generation market, which stood at the $148 billion mark in 2023, is on its way to hitting $259 billion by 2033, growing at CAGR of 5.75%. Furthermore, BloombergNEF expects the hydrogen supply to grow thirty-fold to 16.4 million metric tons per year by 2030; however, they expect 30% of this planned supply to be achieved by 2030 mainly because of longer project timelines and unstable policy support. This supply is driven by the demand coming from electrolysis, which makes up most of the demand; also, blue hydrogen is pushing up the demand for hydrogen.
In terms of the countries’ share of this global supply, the U.S. is expected to account for 36% of this forecasted supply by 2030, thanks to the fact that most mature projects exist in the country, along with favorable tax policies. Moreover, China, Europe, and the U.S. would all together account for most of this supply by 2030 – 80% of the global supply to be exact. Moreover, the U.S also delivers over half of the world’s fuel cell vehicles, and is responsible for the production of 25,000 fuel cell material handling vehicles, over 8,000 small-scale fuel systems in the country, and over 550 MW of large-scale fuel cell power under planning or already installed, according to The Fuel Cell and Hydrogen Energy Association (FCHEA).
China Leading the Game of Hydrogen
On the other hand, China is leading in the game of electrolysis projects, meant for the production of hydrogen, as it owns 40% of these projects that have reached their Final Investment Decision (FID) globally. Kuqa electrolyzer in Xinjiang, which reached its completion in late June 2024, is the largest electrolysis project in the world, with a capacity to produce 200,000 tons of hydrogen per annum, on the back of the 250-megawatt electrolyzer powered by solar energy.
Germany Coming into the Play
Whereas, on the European front, Germany is leaping forward in the electrolysis market, as its government was seen to be confirming funding of two large hydrogen projects, worth $674 million. Similarly, The U.S. Department of Energy announced in March 2024 its plans to invest $750 million in the hydrogen projects, to bring down costs of clean hydrogen and up the advanced electrolysis technologies.
Therefore, with this analysis of the hydrogen market in the bag, it’s quite necessary to conduct an analysis of the best hydrogen and fuel cell stocks to buy right now, so that we can capitalize on this market growth in the coming time. Thus, let’s jump to our list of the 10 Best Hydrogen and Fuel Cell Stocks to Buy.
Methodology
To curate our list of 10 Best Hydrogen and Fuel Cell Stocks to Buy, we gathered a list of all companies with a significant presence in the hydrogen and fuel cell industry. We then further narrowed down on the basis of their upside potential and ranked the finest remaining companies by their number of hedge fund holders as of Q1, 2024, using Insider Monkey’s database that tracks the activity of 920 hedge funds. For stocks with equal number of hedge fund holders, we used their upside as the tiebreaker. With this let’s now jump to our list of the 10 Best Hydrogen and Fuel Cell Stocks to Buy.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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DuPont de Nemours, Inc. (NYSE:DD)
Number of Hedge Fund Holders: 42
DuPont de Nemours, Inc. (NYSE:DD) is a tech-based materials and solutions provider that is headquartered in Delaware, U.S. Its operations span across the U.S., Canada, MENA region, Europe, and Asia Pacific. The company operates through three segments: Electronics & Industrial, Water & Protection, and Corporate & Other. Within its Water & Protection, the company is engaged in water purification and separation for the production and utilization of hydrogen through which the company is striding towards contributing to the global transition to sustainable and clean energy.
In September 2023, the company came up with its first product that was meant for the production of green hydrogen – the DuPont™ AmberLite™ P2X110 Ion Exchange Resin. This resin’s purpose is to produce hydrogen from water and to make the chemical process in electrolyzers seamless.
The company generally maintained the performance of the previous quarter in the recently concluded 1st quarter of 2024. The company recorded net sales of $1.4 billion in the quarter as compared to $1.3 billion in the quarter a year ago, while the EBITDA margin stood at 27.4%, down by 50 basis points. The sales increase was a result of the acquisition of Spectrum the company made a year ago.
As per the full-year guidance for 2024, the company expects its net sales to go as high as $12.4 billion from $12.1 billion in 2023, operating EBITDA to go as high as $3.1 billion from $2.9 billion in 2023, and adjusted EPS to go as high as $3.75 per share from $3.5 in 2023. The company expects its water segment to flourish in the 2nd quarter on the back of higher demand. The demand for the segment was low in the first quarter, which led the segment’s EBITDA to fall by 14% to $295 million. Furthermore, the company is expecting its overall net sales to increase in the second quarter to $3.025 billion, and its EBITDA to increase from $682 million to $710 million in the second quarter. This company expects on the back of volume improvement in its segments and reduced destocking impacts in its water segment. Now whether the company can capitalize on these forecasts is a question that we shall be way about.
Nevertheless, 11 analysts are setting the stock price target at $89.3 from its current price of $80.2, which means they are seeing an upside of 11.3% in the next twelve months amidst the company’s optimistic guidance for the year and improved performance from its water segment. Moreover, 40 hedge fund holders have a stake in the stock, worth $2.1 billion. Thus, the stock makes it to our list of 10 Best Hydrogen and Fuel Cell Stocks to Buy.
Overall DD ranks 6th on our list of the best hydrogen and fuel cell stocks to buy. You can visit 10 Best Hydrogen and Fuel Cell Stocks to Buy to see the other hydrogen and fuel cell stocks that are on hedge funds’ radar. While we acknowledge the potential of DD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DD that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.