1 Canadian Stock Bay Street Bets Will Double in 2023

Analysts expect shares of Ballard Power Systems to more than double in the next 12 months. But is BLDP stock a buy right now?

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Generally, if your investments generate annual returns of 10%, you should outpace inflation and build savings over time. But growth stocks allow investors to generate market-beating gains during a bull run that can create generational wealth in a few years.

In the past decade, several growth stocks delivered exponential gains to investors. But the bear market of 2022 dragged valuations of several companies toward multi-year lows. So, the time is now ripe for identifying quality stocks that can help you deliver robust gains in the next 12 months.

Here’s one such beaten-down Canadian stock that Bay Street thinks will double in 2023.

Ballard Power Systems stock

Down 86% from recent highs, Ballard Power Systems (TSX:BLDP) is currently valued at a market cap of $2.2 billion. Involved in the clean energy space, Ballard Power is engaged in the design, manufacture, and sale of PEM (proton exchange membrane) fuel cell products.

The company has more than 1,400 patents and applications, making it among the leading PEM fuel cell technology players globally. It has focused on applications in which the value proposition of hydrogen fuel cells is the highest.

The fuel cell maker already has a global and diverse fuel cell installation base with an in-service operation of more than 100 million kilometres.

Ballard Power Systems is well poised to benefit from the global shift towards decarbonization, a transition in which hydrogen is expected to play a key role. Last year, total investments in hydrogen as an energy source were close to US$1 billion per week.

Ballard Power has partnered with leading Tier 1 suppliers and is working with vehicle integrators to accelerate demand by bringing early-stage fleets to market.

Hydrogen is a clean energy source as it does not emit greenhouse gases when burned. But extracting hydrogen is an expensive process that has stalled its widespread adoption.

Hydrogen fuel cells can be used to power cars, trains, buses, trucks, and even ships. A few experts also believe hydrogen can replace natural gas in pipelines or be used in power plants to generate electricity. According to market research reports, the green hydrogen market might surpass US$10 trillion at scale.

Is BLDP stock a buy?

Ballard Power Systems has successfully developed PEM fuel cells that run on hydrogen. It continues to work on new technologies that use hydrogen energy. For instance, last year, the company partnered with ABB, a Swiss-based industrial giant, to manufacture fuel cells and power ships.

Ballard Power recently announced a partnership with First Mode, a global carbon reduction company. First Mode’s purchase order includes 30 hydrogen fuel cell modules totalling three megawatts, which will power haul trucks used in the mining industry. The fuel cells will be integrated with renewable power plants and installed in trucks, which will save 2,600 tons of diesel fuel annually.

Priced at 15 times 2023 sales, BLDP stock is an unprofitable company that trades at a premium. But Bay Street remains bullish on the company and expects shares to gain 133% in the next 12 months.

While Ballard Power provides an enticing risk-reward profile, there is a good chance the stock will move significantly lower in 2023 due to bearish market sentiment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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