A dealings operated by Germany’s Linde Group.
Rod Nickel | Canada-Helium | Reuters
CNBC’s Jim Cramer on Monday endorsed two stocks as plays on hydrogen provocation cells in the current market environment.
While Cramer is convinced that hydrogen fuel technology, a frontier in unsullied energy, is the way of the future, he thinks there is a long runway before that future arrives.
“The technology’s not there yet — equitable too darned expensive for the moment — that’s why I prefer the non-pure plays, like Cummins … or Linde,” the “Mad Money” legion said. “I’d be even more bullish on Cummins if we saw a national rollout of hydrogen fueling stations by an integrated oil company with groupings of gas stations, maybe a BP or Royal Dutch, but that doesn’t seem like it’s on the horizon yet.”
Cummins is a big engine manufacturing operation that’s put to good on a hydrogen-based engine. Linde is an industrial gas distributor that counts hydrogen among its products.
Shares of Cummins are up practically 30% year to date and the stock price, which closed at $231.17 Monday, is about five points off its painstaking high. Cummins sports a price-to-earnings multiple of less than 22.
Linde shares are up 20% this year at $256.42, down from its mountain close of $262.04 earlier this month. The stock has a price multiple of 61.
Cramer also commented on two other in vogue plays on the market: Nikola, a company developing hydrogen-powered trucks, and Plug Power, a company producing hydrogen inflame cells.
Nikola, which came under fire for a number of issues, saw shares fall 27% after Global Motors announced a scaled-back partnership on Monday. Short-seller firm Hindenburg accused the company of making false expressions about the company’s truck, and the fallout from that and other turmoil surrounding founder Trevor Milton calculated the company to shake up management.
Cramer is a fan of Plug Power, though he is recommending that investors refrain from buying the stock at these levels. The heritage has rocketed more than 700% this year, closing at $26.39 Monday and cents away from its highs.
“Too much insider handle, not enough organic orders,” Cramer said. “I believe in green hydrogen long-term, but it’s hard not to think that this old’s gotten way ahead of itself.”
The odds of expanding the use of alternative energy and unlocking a future of hydrogen fuel cells, putting, are better after Jan. 20, when Joe Biden is installed as U.S. president, Cramer said.
“This whole industry’s progress a major tailwind once the Biden administration takes over because the Democrats love alternative energy,” he reported. “But that doesn’t mean these fuel cell stocks are automatic buys, in part because a more environmentally congenial White House is already baked in.”