For investors, it is clear that – unlike hydrogen-operated vehicles, which only emit hot air – fuel cell shares should generate high profits. One of the top equities in this segment over recent months has been Ballard Power. The Canadian company, which produces fuel cells for buses and even trains, among other products, are true pioneers in their field, having been active in this sector since as far back as the mid-1990s. In 2019 Ballard Power posted sales of USDmn 106.3, up a tenth by comparison with the previous year. The growth is set to continue, with revenue of around USDmn 130 on the cards for the current financial year. There's no chance of a profit from the company, however: net earnings came in at minus USDmn 39.1, following minus USDmn 27.3 the previous year. The trend is upwards, though, with earnings per share improving by 21 per cent in the fourth quarter.
The European counterpart to Ballard Power, the Norwegian Nel, is likewise a long way from profitability. However, the Scandinavians are generating enormous sales: in the final quarter of 2019, the group posted an increase in revenue of around 41 per cent to NOKmn 175.9, beating analysts' average prediction of NOKmn 154. "Industrial hydrogen applications offering huge overall potential are increasingly common," says a confident CEO Jon André Løkke. The order books at both Nel and Ballard Power are in rude health.
The Swedish PowerCell, which has devoted itself to the heart of the fuel cell, the stack, is also performing well. Based in Göteborg, the company is a supplier to both the commercial vehicle and automotive sectors and shipping, among others. The German SFC Energy also has fuel cells that transform the chemical energy into electrical energy without intermediate stages and with no great losses in efficiency. These particularly efficient power generators are used in stationary applications – such as mobile phone transmitter stations – as well as mobile hybrid supply solutions. The German military is among its major customers.
The hydrogen segment offers great potential. Nevertheless, many industry representatives are still in the red, so it is not yet certain which companies will have their noses in front in the future. A new tracker certificate on the Swissquote Hydrogen Index provides a good way of taking a well-diversified position in this up-and-coming sector. Investors share in the performance of 19 hydrogen pearls, circumventing the risk associated with an individual equity. The barometer is reviewed at regular intervals and brought up to date. In addition to the companies already mentioned, the index includes stocks such as Alstom, Bloom Energy, Linde and Plug Power. In terms of country, the USA and Great Britain lead the barometer with a combined index share of just under 50 per cent. The barometer is also invested in a fund, the Aberdeen Standard Physical Palladium Shares ETF. Palladium, a precious metal, is a key raw material in the construction of a fuel cell.
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