We recently compiled the 10 Best Hydrogen and Fuel Cell Stocks to Buy. In this article, we are going to take a look at Hyster-Yale, Inc. (NYSE:HY) 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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Hyster-Yale, Inc. (NYSE:HY)
Number of Hedge Fund Holders: 20
Hyster-Yale, Inc. (NYSE:HY) is an American integrated company based in Ohio and specializes in designing lift trucks and materials handling solutions and services these through a robust network of independent dealers. To enhance their materials handling solutions and to provide an alternative source of energy for their lift trucks, they have in place their hydrogen fuel cell power products (fuel cell stacks and engines) which their subsidiary, Nuvera Fuel Cells, LLC makes.
Earlier this year, in January, Hyster-Yale, Inc. (NYSE:HY) announced that PortxGroup, a logistics handling company, will act as the distributor of the company’s products in key Asian sub-regions of Thailand, Malaysia, Indonesia, and South Korea, which would bolster the company’s business of materials handling in these regions’ seaports and terminals.
The company recorded an outstanding performance in Q1 2024, wherein, it recorded a revenue of $1.1 billion up by almost 10% to Q1 2023; this is the fourth consecutive quarter that the quarterly revenue has been over the $1 billion mark. Not only did their operating margin increase from 4.3% in Q1 2023 to 7.9% in Q1 2024 (the highest margin ever recorded), but their earnings per share also increased by almost 90% to $2.93 per share! This performance came out on the back of higher average sales prices and an optimal sales mix which resulted in improved margins; average lift truck sales price increase by 17% on a YoY basis.
The company has had an outstanding year in 2023, wherein its Q4 2023 operating profit was up by 146% from Q4 2022, reaching $48.7 million. The full-year net income was up by $200 million, while the revenue was up by 16%.
This continued operational excellence – on the back of product price increases, efficient product mix shifts, and improved product margins – has also led to a surge in the stock, which has increased 58% in the past year, and increased by 20.3% on a year-to-date basis!
Moreover, in May 2024, the company announced a new dealership with LiftOne – which runs a dealership of full-service materials handling and warehouse solutions. LiftOne would cover the regions of North Carolina, South Carolina, Alabama, Georgia, Tennessee, and Virginia in the U.S. for the servicing of the company’s products. This coverage would become effective from the 1st of June 2024. This showcases the company’s commitment to continuous expansion of its coverage to grow continuously.
The stock is priced fairly cheaply currently, and as the analysts are seeing the stock’s intrinsic value sitting somewhere around $96, the stock is carrying an upside of a cool 28%. While this forecast is on the upside, the average price target set by the analysts is also close – sitting at a stock price of $88.5 and carrying an upside of 18.7%. However, the stock carries high risk, as per analysts, which is also evident through the stock’s beta of 1.3; what this means is that the analysts, despite their forecasts, eye a negative earning growth of -5.6% on the downside, which anyone who’s investing in the stock should be wary of.
On the back of strong performance in the first quarter of 2023, and the expansion plans it’s carrying out, the analysts expect the company’s EPS to grow at 18.65% this year. As a result of this, 20 hedge fund holders have kept interest in the stock, worth $100.6 million. GAMCO Investors and AQR Capital Management have the largest holdings in the stock, worth $63 million and $4.9 million, respectively. Hence, the stock is well deservedly placed in our list of 10 Best Hydrogen and Fuel Cell Stocks to Buy.
Overall HY ranks 9th 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 HY 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 HY 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.
