5 Best Hydrogen Stocks to Buy in November 2021

Green energy stocks, which include hydrogen stocks, have whipsawed this year. While the year started off well for the sector and they continued their good run from the last year, they were under pressure in the second and the third quarter of the year.

However, over the last month, hydrogen stocks have recouped some of their 2021 losses amid a general belief that the sell-off was overdone. Meanwhile, the outlook for hydrogen stocks looks positive as the world transitions towards a greener future. Here are the five best stocks that you can buy in November 2021.

1. Plug Power (NYSE: PLUG)

Last month, Plug Power partnered with Airbus to explore the use of hydrogen in air transportation. The company has been making several partnerships and earlier this year South Korea-based conglomerate SK Group invested over $1.5 billion in the company. The two companies would target the hydrogen market in South Korea.

Societe Generale finds PLUG as a pure-play hydrogen stock

The stock has recovered sharply from its lows and is now up almost 27% for the year. Societe Generale believes that PLUG is among the best hydrogen stocks to buy. It termed PLUG as a “pure player” in the industry and expects its upcoming green hydrogen plants in the US to add significantly to its free cash flows.

Wall Street analysts are also bullish on PLUG stock. Of the 17 analysts covering the stock, 13 have a buy rating while the remaining four have a hold rating. However, its median target price of $45.38 is a premium of only about 6% from these levels.

Morgan Stanley finds PLUG a good hydrogen stock to buy

Last month, Morgan Stanley had also issued a bullish note on the stock. “With the announcement of several strategic partnerships, ~$4bn of cash and cash equivalents on its balance sheet, accelerating revenue growth and the potential for significant upside from legislative support, we believe PLUG is particularly well positioned at the outset of a significant transition point in energy,” said Morgan Stanley analyst Stephen Byrd in his note. Meanwhile, PLUG stock has moved above the $40 target price that Morgan Stanley assigned. That said, PLUG looks among the best hydrogen stocks to buy.

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2. FuelCell Energy (NYSE: FCEL)

FuelCell Energy is another good hydrogen stock that you can consider. The stock is up only about 6% for the year and is underperforming the markets. However, it looks like a good buy now after the underperformance.

FCEL is a good beaten down hydrogen stock

FCEL stock has been on an uptrend and has gained over 50% in the last month. It is looking bullish on the charts and has crossed above the 50-day, 100-day, and 200-day SMA (simple moving average). While Wall Street analysts are bearish on the stock and consensus estimates call for a downside of almost 37% from these levels, FCEL can be a contrarian hydrogen stock to buy in November.

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3. BP Plc. (NYSE: BP)

When thinking of hydrogen stocks, BP might not be the first thing that comes to your mind. However, the company has been diversifying its business and is also investing in hydrogen. The company has been exiting some of the fossil fuel business and has been investing aggressively in renewable energy. While these projects might not lead to immediate returns, they would add long-term shareholder value as the world transitions towards a low carbon future.

BP CEO Bernard Looney has been trying to transform the company from a fossil fuel giant to a renewable energy leader. He has announced plans to sell $25 billion worth of fossil fuel assets by 2025. BP has already sold $15 billion worth of assets under Looney. Within the green energy space, BP is also betting on hydrogen. It plans to have the largest blue hydrogen facility in the UK. It is also targeting a double-digit market share in clean hydrogen by 2030 in its core markets.

BP is a hydrogen stock for the long term

Currently, BP’s green energy efforts don’t reflect in the earnings as they are loss-making. However, over the medium to long term, these would contribute handsomely to the earnings. If you are looking at a hydrogen stock for the long term, BP would look like a good fit.

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4. Hyzon Motors (NYSE: HYZN)

Hyzon Motors went public through a reverse merger with Decarbonization Plus Acquisition. The stock hasn’t had a jolly ride and trades well below the SPAC IPO price of $10. The company makes fuel cell-powered commercial vehicles. Here it is worth noting that hydrogen fuel cells are more appropriate for commercial vehicles as they have a higher range and towing capacity. While battery electric vehicles are good for passenger cars, companies prefer fuel cells for commercial vehicles.

HYZN is a risky hydrogen stock

In September Blue Orca Capital accused Hyzon Motors of fabricating the order book and providing rosy financial projections related to its gross margins. While HYZN denied the allegations, the stock continues to trade at depressed price levels. Meanwhile, the company has delivered its first vehicle and recorded revenues in the third quarter. The company expects to deliver 85 trucks by the end of this year.

However, the company faces execution risk. That said, if you can digest the extra risk, HYZN could be a multibagger hydrogen stock if the company executes well on the business strategy.

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5. Defiance Next Gen H2 ETF (NYSE: HDRO)

The hydrogen economy is quite diverse. Apart from fuel cell companies, we also have equipment companies as well as automotive companies that focus on hydrogen. One approach can be to build a diversified portfolio of hydrogen stocks. An alternative way would be to look at an ETF that invests in hydrogen stocks.

HDRO gives you exposure to a basket of hydrogen stocks

HDRO was launched in 2021 only to capitalize on the expected growth in the hydrogen economy. The ETF has an annual expense ratio of 0.55% and tracks the MVIS Global Hydrogen Economy Index. The portfolio consists of companies that get a minimum of 50% of the revenues from the hydrogen economy but there could be exceptions. Plug Power is the largest holding for the ETF and accounts for 14% of the portfolio.

If you don’t want to get entangled in selecting the best hydrogen stocks, you could look at an ETF like HDRO that can give you diversified exposure to the sector.

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