Fuel cells could be the future: here are three stocks that can pay off

The auto industry is going green and it looks like over the next few decades the proven internal combustion engine will be a thing of the past.

At present, electric vehicles are the main replacement. But there are other options. Hyundai Motor Group (OTC: HYMTF) this week, it announced plans to offer hydrogen fuel cell versions of all its commercial vehicles as early as 2028, and fuel cell vehicles could reach cost parity with battery electric vehicles by the end. of the decade.

Hyundai’s claim has been met with some skepticism, and it is certain that fuel cells still have a long way to go to meet the company’s ambitious goal of 2030. But if it is just, there are a lot of companies that would benefit from it. Here’s why three Fool.com contributors will pay special attention to General Motors (NYSE: GM), Flowering energy (NYSE: BE), and Connect the power (NASDAQ: PLUG) as fuel cell technology continues to develop.

Image source: Getty Images.

Invest in fuel cells and more

Lou whiteman (General Motors): Hydrogen fuel cells sound good in theory. The idea of ​​powering vehicles with clean water as the only emission would go a long way in solving the greenhouse gas problems we face. The problem is, producing hydrogen is difficult, and storing it safely is no easy task.

General Motors has been working on fuel cells for more than 50 years, giving it the foundation and technical know-how to adapt quickly if fuel cells become mainstream as soon as Hyundai hopes. It also has a range of batteries and other green powertrains to fall back on in the meantime, and is spending more than $ 35 billion on various forms of clean technology through 2025 to build on the research it does. he performed.

I am not convinced that hydrogen fuel cells will ever be the big winner, I hope they will be when it comes to passenger vehicles. What makes GM the best stock of fuel cells is the company’s work to broaden the total addressable potential market for its technology as much as possible. The company has an agreement with Navistar to supply its Hydrotec fuel cell power cubes for commercial trucks. He also partnered with Westinghouse Air Braking Technologies to use its battery and fuel cell technologies on a new generation of freight locomotives. He is even involved in a demonstration project with the private company Liebherr Aerospace to explore the use of hydrogen to power airplanes.

If the green revolution in the transportation industry unfolds as I think it does, with batteries replacing gasoline vehicles and hydrogen replacing large diesel vehicles, General Motors has the potential to win in both areas.

Investing in new technologies is exciting and can be lucrative. But it’s important to remember that many great ideas never come to fruition the way bulls hope they do. With General Motors, you benefit from a strong auto company investing for the future and the opportunity to profit if fuel cells become a big part of the answer.

GM Hydrotec Fuel Cell Power Cubes. Image source: General Motors.

A commercial and industrial partner

Rich Duprey (Bloom Energy): Hydrogen fuel cell vehicles are getting the most attention, including Hyundai’s recent announcement that it plans to introduce commercial models by 2028, but Bloom Energy is taking a different path.

It manufactures stationary fuel cells for commercial and industrial users to generate electricity, and its customers include businesses, including Adobe, AT&T, Google, Intelligence , and Walmart.

Like any fuel cell technology, Bloom’s units do not create greenhouse gases, but its power plants rely on solid oxide fuel cells instead of the proton exchange membrane, molten carbonate, or batteries. phosphoric acid fuel used in other applications.

The United States is Bloom’s largest market, but South Korea is a world leader in the large-scale deployment of fuel cells such as those manufactured by Bloom. In July, it announced that it would develop a solid oxide fuel cell combined heat and power plant in South Korea in partnership with SK Ecoplant. The first of its kind 4.2 megawatt plant will produce 35,000 megawatt hours per year.

Because global governments are determined to implement policies to reduce greenhouse gases, hydrogen fuel cells have a particularly bright future. President Joe Biden’s multi-trillion dollar infrastructure proposal has the potential to pour hundreds of billions of dollars into industry, and Bloom Energy, because of its goal of reducing or eliminating commercial carbon emissions and industrial, could benefit greatly.

Bloom’s shares, however, have been riding waves of investor interest and annoyance surrounding the hydrogen promise. The shares are trading at half of the all-time high they hit in February, even though Wall Street estimates Bloom will grow earnings at a compound rate of 25% per year over the next five years.

Bloom Energy should be a name in the space that benefits investors.

Money is king – and Plug Power is the king of fuel cells

Rich Smith (Power of the plug): Let me be blunt about this: I personally don’t plan to buy fuel cell stocks in the near future – my reason being that I prefer to invest in companies that are profitable, and right now, there are no fuel cell stocks that match that bill.

That being said, if I were going to invest in a fuel cell stock, Plug Power would be at the top of my list.

Why? Cash. That is why.

Plug Power stock fell last year, if you remember, from less than $ 4 per share in mid-January 2020 to $ 66 per share in mid-January 2021. Now you can safely say that this increase in the share price was not justified. (Indeed, many investors would agree with you. Plug Power is trading today at less than half of its January 2021 price.) What you can’t deny is that Plug Power did. hay while the sun was shining. From August 2020 through January, Plug completed three separate stock offerings, raising a total of $ 2.98 billion in cash.

As a direct result of those actions, Plug Power now sits on top of a $ 4.5 billion cash pile (and has only $ 705 million in debt). Compare that to Ballard Power’s $ 1.2 billion in cash (with negligible debt), Bloom Energy’s $ 204 million (with $ 1.1 billion in debt), and just $ 139 million in cash. of FuelCell Energy (cleared by $ 92 million in debt), and it’s pretty clear – – Plug Power is by far the most financial fuel cell company with the firepower available to it.

It is also quite clear that while success in the fuel cell industry can be purchased, Plug Power is the company most likely to be able to pay the purchase price. Moreover, even if Plug ultimately fails to dominate hydrogen fuel cells, at its current consumption rate of $ 368 million per year, it will take 10 years for the company to run out of cash.

In the long-term race to make hydrogen fuel cell power a global reality, my advice is to bet on the company that has the most endurance. Right now, there is no doubt that Plug Power is that business.