Air Products & Chemicals
- >>> Have a gas with one of the head honchos in hydrogen https://www.fool.com/investing/2020/12/05/forget-fuel-cell-stocks-here-are-3-better-stocks-t/
Air Products & Chemicals: Fuel cell stocks have skyrocketed over the past couple of months, thanks to Bloom Energy entering the commercial hydrogen market and its fellow hydrogen specialist Plug Power expanding further into the stationary power market.
But one of the problems with fuel cell stocks like Plug Power and Bloom Energy is that -- though they're experienced noteworthy top-line growth -- they've consistently failed to prove that their endeavors can generate earnings. That doesn't mean, however, that all hope in hitching your wagon to a profitable hydrogen-oriented company is lost.
While investors will find that fuel cell stocks feature bottom lines consistently shaded red, Air Products generates considerable profits. Over the past 10 years, Air Products has generated average annual EPS of $6.60.
Dealing in a variety of industrial gases
, Air Products is far from a pure-play on hydrogen, but the company recognizes the substantial opportunity in the burgeoning hydrogen economy. This past April, for example, Air Products went on a $530 million spending spree, acquiring five operating hydrogen plants from PBF Energy
. But this pales in scope to its July transaction.
Forming a joint venture with ACWA Power and NEOM, Air Products will work to develop a $5 billion facility that will produce ammonia from wind and solar power
. Air Products will then commit an additional $2 billion to develop the infrastructure to convert the ammonia to hydrogen
. Located in Saudi Arabia
and scheduled to begin operations in 2025
, the joint venture project
is expected to supply 650 tons of hydrogen daily
for transportation applications around the world.
Speaking to the joint venture and the company's leading position in hydrogen writ large, Seifi Ghasemi, the company's president and CEO, stated on the company's third-quarter conference call, "This project is a true game changer for the carbon-free hydrogen market, which as we have always said, we expect to grow significantly in the next decade and we are positioning Air Products to continue to be the leader in the hydrogen space."
I've carved out a nice niche in my portfolio for riskier stocks, and I trust that hydrogen will become increasingly popular in terms of energy solutions. But the risks related to fuel cell stocks are too great for my taste. Air Products seems like a much more reasonable approach.