The ramp-up of a global hydrogen economy

Graph 1-22, ©
Graph 1-22, ©

At the start of 2021, we were still seeing a real hype around hydrogen stocks. Then came a powerful backlash. I see this as a healthy correction to a short-term overheating that is now clearly bottoming out. Despite prices retreating recently, it will result in a stable upward trend in the long run for these stocks in 2022. Still, the plans being announced across the world at present to expand the hydrogen economy are triggering a kind of gold rush. And it is not just the many conferences, strategies and projects that are contributing to this picture but the specific intentions of numerous countries and companies to use technology to combat climate change too.

Large financial intermediaries, i.e., major institutional investors like BlackRock, want to invest massively in hydrogen. This means that for the companies and stock prices mentioned in this report a floor is gradually being established that might serve as the basis for strong prices in the medium to long term. Temporary setbacks are not unusual in these situations. You simply need the key attributes of a professional investor: time and patience.

This industry will not ramp up overnight but it will certainly occur. First of all, production capacities must be built up to be able to respond to demand for any components – different types of electrolyzers or the many and varied fuel cell stacks for various uses and products – starting with deployment in buses, trucks and other commercial vehicles, then in ships and rolling stock, and ultimately aircraft and drones, but also in passenger cars. Fuel cell cars will not appear overnight either but be increasingly likely in five to 10 years’ time because companies like Toyota and Hyundai are pressing ahead and have also clearly identified this market for the future. At the same time, it is a question of expanding delivery capacities for hydrogen, whether that is using pipelines or ships – via green methanol and ammonia or liquid hydrogen – and, of course, expanding the infrastructure needed: hydrogen refueling stations with varying pressure levels for each type of vehicle used.

Anyone investing in individual securities is, of course, also at the mercy of individual stock price fluctuations and ever-changing prices – depending on how the relevant companies position themselves and the news they release (key performance indicators, orders, collaborations, technological breakthroughs, stakes, mergers, etc.). The more sensible investment for conservative investors is a fund that perfectly reflects the area of interest. Although if you buy a good mixture, you’ll not only achieve risk diversification similar to that possible in a fund but also better reflect the different fuel cell/hydrogen areas.

As we are clearly dealing with a new megatrend here, people will arrive at great success with these investments in the coming years, I believe. But overall, follow the advice of the legendary investor Warren Buffet and invest in what you know. Here, you will therefore find plenty of background, analysis and opinions plus interpretations and sources of information so you can assess the companies thoroughly yourself and make up your own mind.

Risk warning

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.

Written by Sven Jösting December 7, 2021

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