‘I’m bullish on hydrogen’ — Jim Cramer breaks down his top hydrogen plays

Energy

CNBC’s Jim Cramer on Friday said it’s time to start taking hydrogen energy seriously as the technology emerges as a reliable alternative energy source.

“If you want to speculate on a sexy long-term story, I’m bullish on hydrogen,” the “Mad Money” host said.

Cramer has been skeptical of bullish trading activity in red-hot speculative stocks, whether it be that a fuel cell company is overvalued or a risky business as in the case of Nikola.

He is now endorsing the stocks of Linde and Plug Power, the first as a conservative play on the space and the second as a more speculative undertaking. As production costs fall and society takes on more sustainable approaches to energy, the hydrogen business has the potential to be adopted for powering homes and cars.

The potential total addressable market could reach $11 trillion by 2050, according to Bank of America.

“Over the next 10 to 20 years, I expect hydrogen to take major market share in transportation, power storage for renewables like solar, and even as a replacement for natural gas buildings all over America,” Cramer said.

Linde, an Ireland-domiciled industrial gas company that handles production and distribution, is valued by the market at $126.1 billion. The stock price, which is about $20 off its highs, has increased by more than 12% this year. The stock rallied 3.25% this week, closing at $239.94.

Linde expects hydrogen to be a big growth driver by 2030 as more alternative-powered vehicles hit the road.

Plug Power, based in Latham, New York, produces hydrogen and fuel cell systems with its eyes on industrial vehicles. One of the company’s end markets is forklifts, for which it has a 10% share, Cramer said.

The stock has surged more than 480% year to date, tacking on another 3% gain on Friday to close at $18.43 a share.

Cramer recommended waiting to buy Plug Power on a pullback. 

“Just keep in mind, this story could take years or even decades to fully play out, but the thesis is correct and green hydrogen does represent the future,” he said.

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