Burckhardt Compression, formerly a subsidiary of Swiss engineering group Sulzer, could become the next stock to pique the interest of investors. The world’s foremost manufacturer of piston compressors, Burckhardt [SIX: BCHN] is increasingly producing equipment that is later used in hydrogen production or transport, as in gas networks delivering hydrogen blends or in electrolyzers, providing the company with new and huge opportunities for growth. Burckhardt is expected to generate CHF 620 million to CHF 650 million in revenue this fiscal year. Its performance last year had already resulted in earnings of CHF 13 a share, including CHF 6.5 in dividend payouts. In its annual report, Burckhardt noted that 2020 saw a “substantial increase” in demand for hydrogen-related components in the transportation and energy sectors.
I’ll put the stock on my watchlist for now. Investors are increasingly focusing not just on companies that produce hydrogen or convert the gas into electricity (via fuel cells). They’re also taking a growing interest in technology suppliers and other companies supporting the sector, as the relevance of both groups is on the rise. I think that gives those businesses an opportunity to set up one or more joint ventures and increase demand for electrolysis. And many big corporations are looking for smaller market players to buy, in an effort to become one-stop hydrogen providers. Companies such as Burckhardt Compression could then, I imagine, be a target for acquisition. As the stock is traded in a narrow market, investors should set an order limit, as well as buy directly from the Swiss stock exchange if they want to acquire a large number of shares. I’m looking forward to reading the news coming out of Burckhardt’s annual general meeting, set to take place on July 2.
Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small- and mid-cap businesses, which means their stocks may experience high volatility. The information in this article is based on publicly available sources, and the views and opinions expressed herein are those of the author only. They are not to be taken as a suggestion of what stocks to buy or sell and come without any explicit or implicit guarantee or warranty. The author focuses on mid-term and long-term prospects, not short-term gains, and may own shares in the company or the companies being analyzed.
Author: Sven Jösting, written June 1st, 2021