Two weeks ago, the Biden administration announced project winners for seven huge regional hydrogen hubs, which is the result of the 2021 Bipartisan Infrastructure Law. The $7 billion government investment is supposed to catalyze another $40 billion in private investment, providing lots of jobs and economic benefits across seven different U.S. regions while bringing hydrogen — an emission-free form of energy ideal in serving heavy industries — to mainstream use.
Those various projects also announced several partner companies in each regional hub, spreading the benefits across a number of industrial stocks.
However, one company that didn’t make the headlines on any of these projects may actually stand to benefit the most. And its stock looks like a solid buy today.
Chart Industries is a key supplier
It has been said that in the 1849 California gold rush, it wasn’t the prospectors that got rich, but rather those that sold the “picks and shovels” to those prospectors.
So while a lot of big companies were named in these hydrogen projects, it’s possible that the biggest beneficiaries may in fact be those that sell “picks and shovels” equipment to those building out these hubs.
That is likely to be a boon for Chart Industries(GTLS -3.05%), which may in fact be the biggest beneficiary in all of this.
Chart is a specialist in cryogenic tanks and heat exchangers, whose biggest business at the moment is liquified natural gas infrastructure. However, that same expertise can be used in hydrogen infrastructure, and Chart has been capitalizing on that trend since 2020.
Moreover, Chart acquired a large company called Howden, based out of the U.K., late last year. Howden is a manufacturer of different types of industrial fans, blowers, and compressors. These products serve a lot of the same markets as Chart’s cryogenic tanks and heat exchangers — including hydrogen — and therefore provide a lot of revenue and margin synergies.
In just the past year, Chart has noted that its total addressable market in hydrogen has doubled, from 512 potential customers in 2022 to 1,170 as of the end of the second quarter of 2023. And Chart’s new or expanded hydrogen partnerships have increased by 16 large 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, in combination with carbon capture technology. And not only is Chart’s main business in natural gas infrastructure, but it’s also a supplier of carbon capture capture equipment. This is the result of a savvy acquisition Chart made during 2020, when many smaller and newer-technology start-ups were available at low prices.
So Chart benefits not only from the hydrogen hubs, but also from the infrastructure that powers those hubs.
What Chart has said about these hydrogen hubs
In an even more bullish turn, on last quarter’s conference call, Chart CEO Jill Evanko noted that the potential revenue from these seven hydrogen hubs wasn’t even in Chart’s backlog as of yet, calling the hubs a “huge opportunity.” But despite that being the case, Chart’s backlog increased over 24.1% last quarter over the prior year. So these new hydrogen hubs could help sustain Chart’s strong growth it has been seeing in LNG demand over the past 18 months, ever since Russia’s invasion of Ukraine.
Evanko also noted that Chart has 60 years of experience handling hydrogen molecules, and Howden has 100 years of experience. Moreover, while Chart is not directly involved with the Department of Energy bidding process, based on her estimates, Evanko projected Chart would have content in a “supermajority” of these hydrogen hub projects.
Moreover, Chart is an international player, especially after the acquisition of Howden. And the U.S. isn’t the only one investing in clean hydrogen. Last quarter, management noted new projects getting going in India, as well as a hydrogen partnership between South Africa and Germany.
Chart could be a bounceback candidate
Chart’s stock sold off a lot after it announced the Howden deal last year, which was made with high-cost debt. However, Chart’s results have impressed this year, seeming to justify the strategic merits of the acquisition.
While the company’s multiple looks high now, because of acquisition costs and interest expenses, Chart only trades at 13 times 2024 earnings estimates.
Given its position not only in the LNG buildout 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 kick in.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
