For years, hydrogen companies -- even the best and biggest -- have been terrible investments. But suddenly, they're stock market superstars. Major players Plug Power (PLUG -2.74%) and Bloom Energy (BE -1.37%) are up 401.5% and 420.8%, respectively, over the past year. 

Ballard Power Systems (BLDP -1.81%), on the other hand, has trailed its peers, climbing "only" 183.6% in the past 12 months. Does that mean that Ballard is a better buy right now, or should investors steer clear after what's still a huge run-up in price? Let's dig a little deeper to find out.

A hydrogen-powered energy storage unit with hydrogen tanks.

Image source: Getty Images.

All new hype

If you haven't heard the big news about hydrogen that's caused these stocks to double or quintuple in value, that's because there really hasn't been any.

Right now, hydrogen fuel cells are pretty much where they've always been: used as a niche alternative fuel source for vehicles that can't easily be taken offline for hours to charge their batteries, like warehouse forklifts or airport safety vehicles. Hydrogen is also used as an alternative fuel for backup electric generators. 

Fuel cells have been touted -- again, for decades -- as a potential zero-emissions fuel for heavy-duty motile applications, like delivery vans, buses, and trucks, but aside from a few limited pilot programs and test vehicles, these have failed to gain traction. In the meantime, rival battery-electric vehicles have stolen the spotlight and seen widespread adoption. 

However, with the advent of hydrogen-truck maker Nikola, which went public through a reverse merger in June, hydrogen recaptured the public's imagination. And interested investors bid up shares of hydrogen stocks across the board.

Same old problems

Aside from the aforementioned hype, nothing fundamental has changed for Ballard. And that's not a good thing, considering Ballard will turn 25 years old (!) in November. It's been trying to get its fuel cell technology widely accepted the whole time, but it hasn't come anywhere close. 

In fact, with the exception of a few stray quarters here and there, Ballard has been losing money for its entire history as a public company. In the last 10 years, it's posted a net profit once -- in Q1 2015. It's only had seven (all nonconsecutive) quarters of cash flow positivity during that time. Meanwhile, its revenue has climbed 92.7% over the past 10 years, meaning that even though Ballard is growing sales, it isn't able to convert that top-line growth into bottom-line profitability. 

Since it's not making money from its operations, Ballard has had to issue more and more stock to keep itself afloat. It's nearly tripled its number of shares over the last 10 years, which means individual shareholders have seen their positions diluted. On Sept. 2, Ballard announced it was issuing yet another $250 million in new shares, diluting existing investors' positions by 6.5%. 

Outlook hazy

Hydrogen's proponents, like the European Commission's Clean Hydrogen Alliance, claim that hydrogen will be an integral part of a clean energy landscape. That may be true, but it doesn't look like a sure thing.

Investments are being made in electrolysis -- a clean way of producing hydrogen from water. The problem is that electrolysis is an energy-intensive process, which means it's pretty costly. Ninety-five percent of U.S. hydrogen fuel is currently made from natural gas...which isn't a clean energy source.

Even if the electrolysis problem could be solved, there are a lot of other obstacles to a hydrogen-powered future, including safety issues -- hydrogen flames are invisible to the naked eye -- and energy retention issues. If these problems can be solved, hydrogen could have a bright future...but Ballard hasn't been able to solve them in 25 years and doesn't appear to be on the cusp of a breakthrough today.

Too much risk

Ultimately, Ballard's poor track record and the challenges still facing widespread hydrogen adoption make this stock too risky to recommend, especially after a huge run-up in price. Ballard would need to notch at least a few profitable quarters and outline a reasonable growth strategy before I'd take a chance on this speculative stock.