The Global X Hydrogen ETF (NASDAQ:HYDR) was launched on July 12, 2021. The ETF included hydrogen stocks to buy that were benefiting from the global hydrogen industry.
Nearly four years later, it has less than $38 million in net assets invested across 25 companies. The ETF itself has lost 79% of its value as of April 30.
ING’s January report about hydrogen was a glass-half-full publication about where the industry is headed.
“We expect the hydrogen market to grow in 2024, but less so than many have hoped for. The year ahead is also set to deliver policies for future growth,” wrote ING Senior Sector Economist Gerben Hieminga.
As the report highlighted, unsubsidized green hydrogen prices remain prohibitive for most European consumers, 2-3 times more expensive than grey and blue hydrogen. In the U.S., prices are about half those overseas.
The report concludes that early proponents of green energy were too optimistic about the future. In 2024, the companies that move the world away from fossil fuels will likely do well.
Here are three names from HYDR to well over the long haul.
Global X Hydrogen ETF (HYDR)
As I was running through the 25 names from HYDR, it occurred to me that the smartest bet if you’re looking for hydrogen stocks to buy, would be the ETF itself. After all, it’s down 79% in less than three years. Should hydrogen stocks make a big move in the next 18-24 months, getting in on the ground floor seems like a winning bet in the long haul.
Many of the names in Global X’s fund are related to the production of fuel cells, etc. The top 10 holdings account for 70% of its net assets. That means in less than two years it will have turned over the entire portfolio.
As you’ll see with the next two names, I’ve selected companies outside the top 10. That’s because it makes little sense to buy one of the stocks with a higher weighting, especially if you plan on buying the ETF and one or two others.
Broken down by sector, the ETF invests in three sectors: industrials (76.8% of the portfolio), consumer discretionary (17.5%), and materials (5.7%). Country-wise, it’s nicely diversified, with the U.S. accounting for 36.2%, followed by the UK (17.0%), and South Korea (11.2%).
While many of the 25 names don’t make money, the average market capitalization is $18.4 billion, which is quite large for money losers.
Consider this the reversion to the mean bet.
Cummins (CMI)
I still remember when my wife and I moved to Halifax. Right across the street and behind us were two military bases. On one of them there was this very large Cummins (NYSE:CMI) diesel generator. On several occasions, it’s been pressed into action during hurricanes and big storms to keep things running.
In April, the company debuted its next-generation B6.7H hydrogen engine at a trade show in Paris.
“Our current B6.7 is a leader in the market, and it is important that we keep developing its capability and value for our customers as well as reducing the environmental impact. The new B6.7H hydrogen engine will fit in today’s machines, work with today’s transmissions and hydraulic systems, and integrate into the industry’s service networks and practices,” said Antonio Leitao, VP of Cummins’ off-highway engine business.
The company’s Engine segment accounted for 28% of its 2023 revenue.
While still in its infancy, the company’s Accelera segment is in the early stages of developing hydrogen production technologies and electrified power systems with innovative components and subsystems, including battery, fuel cell, and electric powertrain technologies.
In 10 years, Accelera should be more than a rounding error on Cummins’ income statement.
Hyster-Yale Materials Handling (HY)
Hyster-Yale Materials Handling (NYSE:HY) manufactures forklifts and other materials handling products for warehouse and logistics operations. Its brands include Hyster, Yale, Maximal, Bolzoni, and several others.
The company’s history dates back to the 1840s when Linus Yale Sr. started making security locks. In 1868, it became Yale and Towne Manufacturing, and in 1875, it entered the materials handling business.
In 1929, The Willamette-Ersted Company is born in Portland, Oregon. Five years later, it became the Willamette Hyster Company. Ten years after that, it was renamed the Hyster Company.
In 1985, North American Coal bought control of Yale. NACCO Industries became the holding company for Yale and others. It bought Hyster in 1989. In 2012, the two companies were combined into Hyster-Yale Materials Handling and spun off from NACCO.
Two years later, it acquired Nuvera Fuel Cells LLC, an alternative-power technology company focused on fuel cell stacks and engines, on-site hydrogen production and dispensing systems.
A decade later, its fuel cell business is starting to generate revenue, but it remains a money loser, funded through its Lift Truck business. In Q4 2023, the segment’s revenue was $982 million with an operating profit of $54.2 million.
The company estimates that Nuvera’s fuel cell products have a global addressable market of $28 billion. It continues to gradually grow hydrogen as a clean power source in more than 20 applications.
On the date of publication, Will Ashworth 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.