Our theme of Hydrogen Economy Stocks, which includes the stocks of U.S. listed companies that sell hydrogen fuel cells, related renewable energy equipment, and supply hydrogen gas, has risen by 8% year-to-date, considerably outperforming the S&P 500 which remains down by 20% over the same period. While growth stocks in general have been hit by rising interest rates, hydrogen and renewable stocks have fared well driven by a mix of favorable regulation, including the passage of the Inflation Reduction Act in the U.S., and an increasing urgency to reduce the dependency on fossil fuels given the surge in oil prices following Russia’s invasion of Ukraine. Moreover, earnings from many players in the space have been relatively strong in recent quarters. For perspective, Bloom Energy’s revenue rose by 41% over Q3, beating estimates.
So, what’s the outlook like for the theme over 2023? While the movement over 2022 was driven by mostly external factors, investors will need to watch for underlying improvements in hydrogen technology, which at present remains expensive and small-scale. Moreover, a continued hawkish stance by the Federal Reserve and the potential for an economic downturn remain key risks for the theme. First Solar (NASDAQ:FSLR) has been the best-performing stock in our theme rising by over 75% year-to-date. On the other side, FuelCell Energy (NASDAQ:FCEL), a company that designs, manufactures, and operates fuel cell power plants, has been the worst performer with its stock down by roughly 50% year-to-date.
|S&P 500 Return||-6%||-19%||72%|
|Trefis Multi-Strategy Portfolio||-6%||-22%||212%|
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 Month-to-date and year-to-date as of 12/26/2022
 Cumulative total returns since the end of 2016