A $50 Billion Investment in Hydrogen Is Coming, and This Company Could Be the Biggest Winner
Hydrogen is emerging as a key player in the clean energy transition, and with a predicted $50 billion investment in the sector, there is immense potential for companies to reap the benefits. One such company that could emerge as the biggest winner is XYZ Energy Ltd.
XYZ Energy is a leading player in the hydrogen sector, focusing on the production, distribution, and storage of hydrogen. The company’s expertise lies in utilizing renewable energy sources, such as solar and wind, to produce hydrogen through electrolysis. By leveraging these clean energy sources, XYZ Energy ensures minimal carbon emissions during the hydrogen production process.
The $50 billion investment in hydrogen is likely to spur significant growth and development in the industry. This investment can fuel advancements in hydrogen production technologies, infrastructure development, and create a robust hydrogen supply chain. XYZ Energy, being at the forefront of the hydrogen revolution, stands to gain immensely from this massive investment.
One of the key advantages of hydrogen as a clean energy source is its versatility. It can be used in various sectors, including transportation, industrial processes, and power generation. XYZ Energy’s comprehensive approach to the hydrogen market positions them to tap into all these potential applications. From fuel cell cars to stationary power plants, XYZ Energy’s expertise can cater to the diverse demands of the hydrogen sector.
Moreover, XYZ Energy’s commitment to ensuring sustainability in their operations aligns perfectly with the current global focus on decarbonization. As countries strive to reduce carbon emissions and transition to greener energy sources, XYZ Energy’s clean hydrogen solution could become a key contributor.
As the industry leader, XYZ Energy is well-positioned to secure a significant share of the $50 billion investment in the hydrogen sector. Their cutting-edge technology, extensive experience, and commitment to sustainability make them the prime candidate to emerge as the biggest winner in this burgeoning field. Investors looking for a potential windfall in the clean energy sector should keep a close eye on XYZ Energy’s growth trajectory.
Two weeks ago, the Biden administration announced project winners for seven massive regional hydrogen hubs, which are the result of the bipartisan infrastructure bill of 2021. The $7 billion government investment should catalyze another $40 billion in private investment, creating many jobs and economic would deliver benefits in seven different US regions, while hydrogen – a zero-emission form of energy ideal for heavy industry – would become mainstream. .
Those different projects also announced different partner companies in each regional hub, spreading the benefits across a number of industry stocks.
However, one company that didn’t make headlines on any of these projects could benefit the most. And the shares look like a solid buy today.
Chart Industries is a major supplier
It is said that during the California gold rush of 1849, it was not the prospectors who got rich, but rather those who sold the “picks and shovels” to those prospectors.
So while many major companies have been named in these hydrogen projects, it’s possible that the biggest beneficiaries will actually be those selling ‘guns and shovels’ equipment to those building these hubs.
That’s probably a blessing for that Graphics industries (GTLS -3.05%)who, in fact, may be the biggest beneficiary of all this.
Chart is a specialist in cryogenic tanks and heat exchangers, whose largest activity is currently liquefied natural gas infrastructure. However, the same expertise can also be used in hydrogen infrastructure, and Chart has been responding to that trend since 2020.
In addition, Chart acquired a large company called Howden, based in Britain, late last year. Howden is a manufacturer of various types of industrial fans, blowers and compressors. These products serve many of the same markets as Chart’s cryogenic tanks and heat exchangers – including hydrogen – and therefore provide many revenue and margin synergies.
In the past year alone, Chart has noted that the total addressable hydrogen market has doubled, from 512 potential customers in 2022 to 1,170 by the end of the second quarter of 2023. And Chart’s new or expanded hydrogen partnerships have increased by 16 major partnerships. customers this year through the second quarter.
Not only that, but some of the new hydrogen hub projects will actually be powered by natural gas, combined with carbon capture technology. And not only is Chart’s main business in natural gas infrastructure, but it is also a supplier of carbon capture equipment. This is the result of a smart acquisition chart created in 2020, when many smaller and newer tech startups were available at low prices.
Chart therefore not only benefits from the hydrogen hubs, but also from the infrastructure that powers these hubs.
What Chart has said about these hydrogen hubs
In an even more optimistic twist, Chart CEO Jill Evanko noted last quarter that the potential revenue from these seven hydrogen hubs wasn’t even in Chart’s backlog, calling the hubs a “huge opportunity.” But despite this being the case, Chart’s order book increased by more than 24.1% last quarter compared to the previous year. These new hydrogen hubs could therefore help sustain Chart’s strong growth in LNG demand over the past eighteen months, since Russia’s invasion of Ukraine.
Evanko also noted that Chart has 60 years of experience dealing with hydrogen molecules, and Howden has 100 years of experience. Although Chart is not directly involved in the Department of Energy’s bidding process, Evanko predicted, based on her estimates, that Chart would have substance in a “supermajority” of these hydrogen hub projects.
Moreover, Chart is an international player, especially after the takeover of Howden. And the US is not the only one investing in clean hydrogen. Last quarter, management noted new projects starting in India, as well as a hydrogen partnership between South Africa and Germany.
Chart could be a rebound candidate
Chart’s shares sold off heavily after it announced the Howden deal last year, which was done with expensive debt. However, Chart’s results have been impressive this year and appear to justify the strategic benefits of the acquisition.
Although the company’s share price looks high now, Chart is only trading at 13 times 2024 earnings estimates due to acquisition costs and interest expense.
Given its position not only in the LNG expansion, but also in energy transition markets such as hydrogen, carbon capture and water purification, Chart is a strong industrial name to watch as these hydrogen hubs take off.
