FOMO Rally in energy and defense! Hensoldt, Siemens Energy, First Hydrogen

First Hydrogen: Revaluation through a new business area?

First Hydrogen's stock belongs to the new generation of hydrogen companies. The business model is currently being expanded to include a hot topic: hydrogen from nuclear energy. The aim is to benefit from growing electricity consumption – both in the US and globally – while at the same time taking advantage of its storability. At 33.33 kilowatt hours per kilogram, hydrogen has the highest energy density of all fuels. By way of comparison: One kilogram of hydrogen has about three times as much energy as one liter of gasoline. First Hydrogen plans to use this and combine hydrogen production with small modular nuclear reactors (SMRs). This is particularly interesting for the US: SMRs are gaining acceptance there – Bill Gates is pushing the topic, and companies like Google, Amazon, and others are investing enormous sums in data centers for artificial intelligence and the required energy production. At the same time, however, the power grids are at their limit, and their expansion and modernization are not keeping pace. With compact SMRs, energy could be produced decentrally in the future and efficiently stored and transported as hydrogen – independently of the ailing power grids. From First Hydrogen's perspective, electricity generation could be carried out at 3.6 cents per kWh, making it highly competitive.

With a renowned partner by its side, First Hydrogen's stock could skyrocket. This is especially true considering that its market capitalization is currently under CAD 30 million.

And then, of course, there is the core business: hydrogen-powered fuel cell commercial vehicles (FCEV). These have been developed in recent years and have proven themselves in everyday operations. In the UK, test vehicles have been successfully deployed in practice by online giant Amazon, among others. The range and reliability were significantly higher compared to battery-powered commercial vehicles. A first large order for these hydrogen-powered fuel cell vehicles would likely lead to a significant jump in the stock price.

Siemens Energy: Strong figures

Siemens Energy is currently doing well. "Our strong first quarter reflects the market opportunities created by the increasing demand for electricity. The very good cash flow is mainly due to growth in all our business areas, as well as advance payments and deferred payments. We continue to focus on profitable revenue growth and our technological leadership," comments CEO Christian Bruch on the development in the first quarter of fiscal year 2024/25.

The DAX company increased its revenue by 18.4% to EUR 8.9 billion. Earnings before special items more than doubled from EUR 208 million to EUR 481 million. The free cash flow before tax was impressive at EUR 1.5 billion. In the same period of the previous year, it was still EUR -283 million. The book-to-bill ratio (ratio of new orders to revenue) was 1.53. As a result, the order backlog rose to a record EUR 131 billion. As part of its half-year report, Siemens Energy plans to increase its free cash flow forecast, which previously stood at just EUR 1 billion.

The share price is now already trading at almost EUR 64. Berenberg, at least, sees further upside potential. Following the quarterly figures, the analysts at the private bank raised their price target from EUR 70 to EUR 75. Deutsche Bank even speaks of a "supercycle" for Siemens Energy. The analysts also raised the price target, although at EUR 65 it no longer fits with the "Buy" rating. Analysts at mwb research believe that the share price now anticipates too many positive developments. The experts praise the operating performance and raise their price target from EUR 45 to EUR 50. However, with a price of over EUR 63, they had to lower their rating from "Hold" to "Sell".

Hensoldt & Co.: Defense stocks are soaring

German defense stocks continue to surge higher in the new week. On Monday alone, Hensoldt, Renk, and Rheinmetall each gained over 13%. Meanwhile, one must speak of a FOMO rally. Fear of missing out on the rally is greater than concerns about overvaluation. This now applies to all three German defense stocks.

The trigger for the latest price jump was the Munich Security Conference (MSC) at the weekend. The representatives of the US government made it more or less clear that they will contribute less and expect more from Europe. The two percent target for defense spending by NATO members – which has so far been met by only a few countries – is likely to be exceeded soon. Even if it is not the 5% called for by Donald Trump a few weeks ago, it is clear that Europe and the entire NATO will likely need to massively increase military spending in the coming years, perhaps even decades. This is necessary to protect themselves from an aggressor like Russia and to avoid being crushed on the global stage between the US, China, and Russia.

Hensoldt has easily surpassed its all-time high from March 2024 with Monday's price jump, generating a strong buy signal. With the current FOMO rally, it could go even further north. By contrast, First Hydrogen, with a market capitalization of less than CAD 30 million, is an exciting turnaround bet. The Company even has two aces up its sleeve to achieve this. It needs a prominent partner for its pink hydrogen or a major order for its FCEVs. Investors are eagerly awaiting new moves in the energy sector. Siemens Energy showed last year how such plays can develop. The operating performance is also positive, and momentum could continue.