The road to net zero has pushed hydrogen into the spotlight as a clean energy solution. As an emerging player in the world economy’s road to decarbonization, the hydrogen market also offers potential for significant growth. While hydrogen extraction still has a long way to go before widespread use, that doesn’t mean no opportunities are on the horizon. So, it’s no surprise that investors are now eyeing hydrogen stocks to ride the potential wave.
So, let’s look closer at the wider industry, focusing on developing and applying hydrogen to various solutions. We might find some interesting picks that are well-positioned for growth.
To that end, I’ve examined three companies showing excellent prospects for sustained growth. To come up with the list, I screened for the following criteria:
- Companies involved in hydrogen production, generation, storage, supply, fuel cells, batteries, systems and solutions.
- Revenue growth of at least 15% YOY.
- Cash from operations growth of at least 10% YOY.
With this approach, investors can avoid speculative growth companies and focus on ones with solid foundations for future leadership in the hydrogen market.
Hyster-Yale Materials Handling (HY)
Hyster-Yale Materials Handling (NYSE:HY) is an integrated company that offers application-tailored lift trucks and solutions. It also provides hydrogen fuel cell power products and power options for its lifts.
The company develops, sells, and services lift trucks under its subsidiary Hyster-Yale Group, Inc. It also markets them under the Hyster and Yale brand names. Hyster was the first company to create the first hydrogen fuel cell-powered container handler and turned a fossil-fuel guzzling system into a sustainable zero-emission sustainable one. The company’s contributions to decarbonization have earned it a finalist in the World Hydrogen Awards.
Hyster-Yale reported a strong FY’23. Full-year net income reached $125.9 million, a turnaround from its loss of $74.1 million in 2022. Average sales price grew 16% YOY, and cash flow from operations ended at $151 million for the full year. This significantly improved from the previous year’s $41 million cash flow.
While geopolitical instability has caused macroeconomic challenges, Hyster-Yale’s lift-truck business has shown resilience. Revenue growth has been driven by price increases and favorable currency effects despite decreased unit shipments due to product launch issues and challenges in the supply chain.
With its strong market dominance and competitive advantage, HY stock is a no-brainer for any investor looking to invest in hydrogen stocks.
Cummins (CMI)
A household name traditionally known for its diesel engines, Cummins’ (NYSE:CMI) pivot into the energy storage and hydrogen sector is a game changer for the company.
Cummins Accelera segment, which focuses on zero-emission solutions, is its pioneering initiative in designing and manufacturing electrified power systems and hydrogen production technologies. One of Accelera’s achievements was powering the first green hydrogen passenger train in North America with Accelera fuel cells, which run on hydrogen.
While Cummins experienced challenges during the end of the year due to charges to resolve U.S. regulatory claims and various costs, the company still managed to grow its full-year 2023 revenue by 21% YOY, driven by the increase in North American demand.
Net cash from operating activities also doubled from $1.96 billion in FY’22 to $3.97 billion in FY’23.
Cummins is committed to transitioning to a zero-emission strategy as it continues investing in new technologies and products under its Destination Zero strategy.
Even with market challenges, its strong performance, resilient business and growth show Cummins is bound for growth.
Chart Industries (GTLS)
Chart Industries, Inc. (NYSE:GTLS) is a key player in the hydrogen market and a global leader in engineered services in the clean energy sector.
Under its cryo tank solutions and heat transfer systems segments, the company provides storage and distribution services and supplies equipment for the separation, liquefaction, and purification of hydrocarbons and gas.
Chart Industries recently announced the opening of its jumbo cryogenic tank manufacturing facility in Theodore, AL. The facility will increase capacity and scale, lower freight costs, shorten customer lead times, and support business growth.
Being a champion for a sustainable future has its perks. The company’s sales grew to $3.35 billion, towering above its 2022 sales numbers of $1.61 billion—a whopping 108% growth.
In addition, Chart Industries’ net cash from operating activities increased to $234.8 million in FY’23. This is impressive growth compared to $80.8 million in the previous year and highlights a thriving core business.
Investors looking for growing hydrogen stocks will be pleased to learn that Chart expects total sales growth of 28% to 37% and adjusted EBITDA growth of 52% to 68%. These excellent growth forecasts testify to its confidence in growing its business. So, for those looking for hydrogen stocks, you might want to act now before Chart leaves everyone in the dust.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.