CNBC Pro Want in on green hydrogen? This bank names six stocks to buy right now
Berenberg has listed six stocks to buy in the clean energy sector, including in the closely-watched “green” hydrogen space.
Analysts at the investment bank noted that while the hydrogen sector has underperformed so far in 2021, it could get a serious boost from the Biden administration, with the U.S. Department of Energy recently announcing plans to reduce green hydrogen’s production costs by 80%.
Currently, the vast majority of hydrogen production is based on fossil fuels, but the potential of so-called green hydrogen is exciting investors. It’s made through a process known as electrolysis, which splits water into hydrogen and oxygen using electricity from renewable sources. Hydrogen has myriad uses, for example to heat homes, as an industrial gas or in fuel cells to power cars, trucks, trains and more.
Berenberg analysts have named a number of stocks in the sector that look “attractive” right now, with an upside potential of more than 15% to their current share price within the next year.
Among the six buy-rated stocks in a note dated June 15, the Berenberg analysts said Norway’s Aker Carbon Capture and Danish firm Vestas Wind Systems were their favorites.
The analysts stressed that although the hydrogen sector was down around 18% so far this year, lagging biofuel and batteries, “newsflow in the space remains supportive and the industry continues to work to drive down costs and increase the scale of the hydrogen economy.”
On Aker Carbon Capture, Berenberg estimates a price target of 23 Norwegian krone (NOK) or $2.69 per share, up from the stock’s price of 17.80 NOK on June 15.
Berenberg said it viewed the stock’s current price level as an “attractive opportunity” and noted that “an expected 50% fall in costs by 2025, combined with rapidly increasing carbon pricing (we look for 110 euros per ton by year-end), should contribute to huge growth in carbon capture and storage.”
It noted that the company “has a leading technology offering and is the only pure-play listed company that has exposure to this rapidly growing market.”
The bank gives Vestas Wind Systems, meanwhile, a price target of 285 Danish krone (DKK) or $45.74 per share, up from its price of 226.20 DKK on June 15.
Berenberg said that it views “the company’s underperformance this year as an attractive entry point into a market leader that has high market share and strong returns.”
“We expect Vestas to benefit from margin recovery in the onshore turbine division ... In addition, the new 15MW offshore product gives Vestas an edge over competitors heading into a period of substantial contract awards in the space and could materially boost backlog over the next two years, thereby improving confidence in the long-term outlook.”
The analysts’ other buy-rated picks are:
Ilika, a U.K.-based technology company developing solid-state battery technology to replace lithium-ion batteries. The bank gives it a price target of 275p ($3.83), up from 186p on June 15. McPhy, a French company that develops and supplies hydrogen production, storage, and distribution equipment for hydrogen energy, was given a price target of 35 euros ($41.7), up from 27.30 euros on June 15. Nel, a Norwegian company focused on the production, storage and distribution of hydrogen from renewable energy sources, is given a price target of 30 Norwegian krone ($3.51) up from its current share price of 17.66 NOK. Spanish solar power producer Solaria Energia y Medio Ambiente was also given a buy rating and price target of 26 euros per share, up from the current price of 15.83.
|