Hydrogen stocks were some of the biggest winners in 2020.
Industry leader Plug Power (NASDAQ:PLUG) saw its stock price rise just shy of 1,000% last year, while shares of FuelCell Energy (NASDAQ:FCEL), Bloom Energy (NYSE:BE), and Ballard Power (NASDAQ:BLDP) all rose more than 225%.
These big rallies were driven by – as we’ve discussed at length before in these issues – falling hydrogen fuel cell costs, strengthening legislative support for clean energy, and a pivot into “Green Hydrogen” production (where hydrogen is created from renewable energy sources, not natural gas).
Many investors reasonably think that hydrogen stocks – after such an enormous breakout in 2020 – are due for a breather in 2021.
But quite the opposite is true.
Democrats have seized control of Washington D.C. For the next two years, they’ll retain power in the White House and both chambers of Congress. Over that stretch, they will pass sweeping legislation to combat climate change. A core tenant of that legislation will likely be substantially larger and extended subsidies for hydrogen, particularly for green hydrogen.
The result will be a “Green Wave” over the next few years wherein consumer and business adoption of green hydrogen will soar.
So… make no mistake… the Hydrogen Economy breakout that started in 2020 won’t end in 2021.
Rather, it’s only going to accelerate and gain momentum over the next few years.
As it does, red-hot hydrogen stocks will only get hotter…
Today, we will tell you about one such hydrogen stock that has particularly attractive long-term upside. It’s a green hydrogen company that is leveraging a breakthrough technological process to turn into Europe’s cleanest and most efficient hydrogen producer – and, in so doing, could score you 14X gains.
Improving Hydrogen Conversion Efficiency with a Breakthrough Technology
For all its wonderful benefits, hydrogen has one major shortcoming: Poor energy conversion efficiency.
Long story short, hydrogen – while the most abundant element in the universe – doesn’t exist in its pure form on Earth. So, producing hydrogen requires a complex, multi-step process which results in significant electricity loss.
Not good. Until producing green hydrogen becomes more efficient, it will forever remain a niche energy source.
Fortunately, one small, $210 million disruptive company by the name of Fusion Fuel (NASDAQ:HTOO) is on the cutting edge of creating a new type of hyper-efficient green hydrogen.
Here’s the story.
Solar electricity is converted into hydrogen power using a fuel cell called an “electrolyzer.” These electrolyzers have traditionally been too big to place on solar panels or modules themselves, so the electrolysis has historically been done “off-site.” The transfer of solar energy from panel to electrolyzer usually results in some energy loss, contributing to hydrogen’s low efficiency.
Fusion Fuel, though, has developed proprietary super-small electrolyzers that can be integrated into the solar cell. Thus, there is no energy transfer and no energy loss.
At the same time, by performing “at-the-source” electrolysis, Fusion Fuel’s electrolyzers are able to utilize the solar system’s “waste heat” – or heat that is generated as a byproduct of the system doing work (think about how your computer generates heat when it does work).
Without energy transfer loss and with waste heat utilization, Fusion Fuel’s electrolyzers are pioneering a new era of hyper-efficient green hydrogen.
Fusion Fuel’s systems convert solar energy into hydrogen at a 27% conversion rate, which is more than double the status quo in the market today.
Meanwhile, due to this dramatic increase in conversion efficiency, Fusion Fuel is able to produce a lot of green hydrogen while using a fraction of the resources of anyone else in the market – which, in turn, enables Fusion Fuel to deliver green hydrogen at industry-low costs.
Fusion Fuel’s green hydrogen sells for about 50% to 80% less than other green hydrogen in the market.
In other words, Fusion Fuel is leveraging proprietary technology to create a new class of green hydrogen that is twice as efficient as anything out there, and about half as expensive as anything else, too.
That’s broadly a winning combination which implies that Fusion Fuel will turn into the world’s biggest green hydrogen producer.
To be sure, this is far from a reality today. Fusion Fuel is not actively commercializing green hydrogen yet, hence the mere $210 million market cap.
But… the company is in negotiations to develop multiple green hydrogen projects throughout Europe over the next one to five years.
As these hydrogen projects come to life, the world will start to see that Fusion Fuel’s breakthrough electrolyzer technology does indeed result in hyper-efficient and hyper-cheap green hydrogen.
And… as that happens… Fusion Fuel will go from having a promising technology concept in 2021, to being the global supplier backbone of the Hydrogen Economy by 2025.
Of course, amid that revolutionary transition, Fusion Fuel stock will soar.
This is a $210 million company today. My numbers say that Fusion Fuel could easily do about $150 million in net profits at some point in the back-half of the 2020s. Based on a 20X multiple, that implies a potential future valuation of $3 BILLION – representing 14X upside from current levels.
Needless to say, then, if you’re looking to increase your exposure to the Hydrogen Economy and the Green Wave, you should consider buying Fusion Fuel stock today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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