Hydrogen energy is often hailed as an ideal green alternative to fossil fuels, as it can be produced using renewable energy such as wind or solar to produce the electricity needed to split water into its components such as hydrogen and oxygen. The extracted hydrogen is then used to power an engine, and the only byproduct of the burned fuel is water. But being an ideal fuel has not been a sufficient incentive for companies in this sector of the energy industry over the past decade, and most hydrogen stocks on the market have been depleted.

Industries have been slow to adopt hydrogen energy because it is currently more costly to produce hydrogen fuel than to extract and process oil or natural gas, and it is more cost-effective to expand existing power grids than to build new hydrogen infrastructure. Inflation and rising interest rates have made financing hydrogen projects more expensive and even less attractive.

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But as hydrogen technologies improve and the macroeconomic environment improves (including declines in interest rates), savings from using hydrogen may offset these initial costs. If this happens, many hydrogen industries He could get better. Fortune Business Insights predicts that the hydrogen fuel cell market will grow at a compound annual growth rate (CAGR) of 30% from 2024 to 2032, while Research Nester expects the hydrogen vehicle market to expand at a CAGR of 45% from 2025 to 2037.

We should approach these bullish bets with a grain of salt, but these are two unpopular stocks from two sectors — Plug Power (NASDAQ: PLUG) And Nikola (NASDAQ:NKLA) – may rise higher as winds come. Both of these stocks are volatile, but they have the potential to turn a modest $200 investment into several thousand dollars over the next few years.

1. Plug Power

Plug Power mainly provides hydrogen fuel cells and charging services for forklifts in warehouses and fulfillment centers. More than 69,000 fuel cell systems and 250 fuel stations have been deployed so far; Among its most important customers are: Amazon And Walmartand is the world’s largest single buyer of liquid hydrogen.

Plug Power’s revenue grows 40% in 2022 and 27% in 2023. Much of that growth was driven by two major acquisitions that expanded its cryogenic equipment unit and offset slowing growth in its core hydrogen fuel cell business, which has struggled with macro headwinds. reduced the market’s appetite for expensive new hydrogen projects. Its net losses also increased in both years as it integrated these acquisitions.

However, analysts expect Plug’s revenue to grow at a CAGR of 25% from 2023 to 2026, narrowing its net losses. The U.S. Department of Energy (DOE) also recently awarded the company a new $1.66 billion loan to build six new green hydrogen energy production facilities.

With an enterprise value of $2.67 billion, Plug’s shares appear to be undervalued by 2.3 times next year’s sales. still a highly speculative stockhowever, this rate may rebound as more companies upgrade their logistics networks with hydrogen charging systems. Additionally, company insiders have bought almost five times as many shares as they sold in the last 12 months, and Norway’s Norges Bank recently increased its stake in the company to almost 8%.

2. Nicholas

Nikola produces electric semi-trucks. It initially sold battery-powered electric trucks (BEVs), but this year it started delivering the first hydrogen fuel cell electric trucks (FCEVs). It’s off to a rocky start following its public debut in 2020: It largely missed original delivery targets, founder Trevor Milton was convicted of securities and wire fraud in 2022, and a series of battery fires in 2023 forced it to recall all its BEVs forced. . It is also unprofitable, has nearly quadrupled its share count in the past three years to raise more money, and faces stiff competition. Daimler Truck And Tesla’s in the nascent electric semi-truck market.

But in the midst of all these difficulties, a few green shoots emerge. BEV sales are still suspended as it resolves battery issues, but it has delivered 203 FCEVs in the first nine months of 2024. It expects to deliver 300-350 FCEVs for the full year, and analysts expect its revenue to more than triple to $112. million. By 2025, they expect Nikola’s revenue to nearly triple to $328 million as it increases FCEV shipments and restarts its BEV business. Nikola also aims to build a network of 60 hydrogen charging stations across the US with partner Voltera by 2026.

With an enterprise value of $338 million, Nikola’s shares look cheap at roughly 1x next year’s sales. Insiders also bought 15 times more shares than they sold in the last 12 months; This could be an attractive long-term play in the hydrogen vehicle market.

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John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. Leo Sun They have positions in Amazon. The Motley Fool has positions in and recommends Amazon, Tesla and Walmart. The Motley Fool has a feature disclosure policy.