The CO2 markets and emissions trading are among the few winners of the climate conference in Baku. The dynaCERT share should benefit, as the technology company could face a surge of orders in 2025, potentially leading to a revaluation of the stock. Siemens Energy has recently demonstrated just how quickly and dramatically a revaluation can occur. According to analysts, the rally is far from over. In contrast, Plug Power faces an uncertain future. While experts remain optimistic about the hydrogen sector, the US company is not among their recommendations. So, who are the true beneficiaries of the hydrogen boom?
dynaCERT: Price multiplication in 2025?
dynaCERT (TSX:DYA) can count itself among the few winners of the climate conference in Baku. Thanks to EU representatives, the rules for international CO2 markets are being specified, new offsets are being defined, and transparency is being increased – perfect timing for dynaCERT. A few weeks ago, the Company’s HydraGEN products for reducing diesel engine emissions were certified for trading CO2 certificates. This positions dynaCERT for a potential surge in orders next year, propelling it into a new league. The stock is likely to benefit significantly from this development.
The foundation for massive growth is in place. This year, the Company has delivered the first HydraGEN systems to numerous customers. In addition, the Company has strengthened its workforce: German executive Bernd Krüper brings decades of experience in the European automotive and engine sector and is expected to drive sales, particularly in Europe. Investors can gain insights from him during the 13th virtual International Investment Forum, IIF, on December 4, 2024. Click here for free registration. Last week, Doug Seneshen was appointed to the Board of Directors. With over 40 years of experience in the international energy and propulsion systems business, he brings a robust network in key industries such as mining, oil and gas, defense, marine, and power generation – precisely the areas of interest for dynaCERT.
Background: The HydraGEN technology was developed by dynaCERT to reduce pollutant emissions and fuel consumption in commercial vehicles. The patented system can be easily retrofitted into conventional diesel engines. The focus is particularly on users of heavy vehicles in the mining, oil and gas, transportation, and power generation sectors. With the recent VERRA certification, customers are assured of improving their ESG profile while earning and trading CO2 certificates.
The dynaCERT share price jumped in response to the VERRA certification and is currently consolidating. If new customers and orders are secured in the coming weeks, significantly higher prices should be possible.
Siemens Energy: Will the rally continue?
In 2024, Siemens Energy (OTCPK:SMEGF) impressively demonstrated what could happen to dynaCERT shares in the coming year. In the fall of 2023, it was still being treated as a bankruptcy candidate. In 2024, it is one of the top performers on the DAX, with a gain of over 300%.
Siemens Energy is considered to be one of the beneficiaries of the massive investments in energy infrastructure. The profit margin is expected to improve significantly in fiscal year 2024/25 thanks to the gas and grid business. In addition, the continued weakness in the wind power business can be compensated. With the latest quarterly figures, the medium-term targets were also raised. In the coming years, Siemens Energy aims to increase sales in the high single-digit to low double-digit percentage range. The profit margin is expected to be between 10% and 12% in fiscal year 2027/28 – previously, the target was at least 8%.
Despite the massive rally, analysts still see upside potential. On Monday, Berenberg doubled its target price for Siemens Energy shares to EUR 70. The stock is currently trading around EUR 49 and is, therefore, a “Buy” for the analysts. From the experts’ point of view, not only the booming gas and grid businesses speak in favor of a higher valuation. The wind power business is also contributing, but it is viewed negatively by the market.
Plug Power: Morningstar doubts a comeback
While the carbon price gains significance as a key mechanism in the fight against climate change – benefiting companies like dynaCERT – sentiment in the hydrogen sector is currently subdued. In particular, the shares of former high-flyers such as Nel and Plug Power (NDAQ:PLUG) have fallen sharply. Both companies are struggling with less growth and continued high losses. The fact that the technology is important for the energy mix of the future is confirmed by the current study by “Morningstar”. The experts also highlight their top stock picks in the sector.
However, the analysts at Morningstar do not see Nel, Plug Power & Co. as the profiteers. Instead, they recommend large industrial gas companies such as Linde, Air Liquide, and Air Products and Chemicals. According to the Morningstar experts, they all have a “Wide Moat” rating and could keep competitors at bay in the long run.
Morningstar analyst Krzysztof Smalec commented: “We expect industrial gas companies to participate in the full spectrum of hydrogen production and distribution. We expect the transition from grey to blue and green hydrogen to be gradual, and we believe that industrial gas companies can leverage their well-established conventional hydrogen business to capitalize on the new opportunities created by the energy transition.”
In contrast, risks associated with Plug Power are being highlighted. Morningstar equity analyst Brett Castelli notes: “We see two of the biggest long-term risks coming from competition from battery-electric technology and established players in the industry. In our view, battery technology poses the greatest risk to the truck market, which is expected to be one of the largest sources of hydrogen demand in the long term. In addition, competition from well-funded rivals – particularly truck OEMs and industrial gas companies – poses a credible threat to Plug.”
Currently, there is little reason to consider buying Plug Power shares despite the possibility of occasional short-term price surges. In contrast, dynaCERT shares could be among the big winners next year. Its retrofit technology offers fleet operators a return on investment within a year, significantly simplifying the purchasing decision for fleet managers. At Siemens Energy, the upward trend is intact, and the rally seems set to continue.
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