As the 2024 US elections approach, the renewable energy sector is bracing for a potential market shake-up. JPMorgan analyst Mark Strouse has identified several key players whose stock performance could be significantly influenced by the election outcome.
First Solar, NextEra Energy, and Enphase Energy:
These companies are seen as potential beneficiaries of a Democrat sweep or a Trump/Harris victory with a split Congress. This scenario would likely lead to a ‘knee-jerk relief rally’ for renewable stocks, driven by investor confidence in the continued support for the Inflation Reduction Act (IRA), a key driver of renewable energy investments.
First Solar’s Trump Advantage?:
An interesting twist emerges if Donald Trump secures a victory. Strouse believes that a Trump presidency could lead to the implementation of additional tariffs on solar imports, giving First Solar a pricing advantage over international competitors. This could translate into a significant boost for First Solar stock in 2024.
Sunrun and Sunnova: A Potential Split Congress Upside:
Sunrun Inc and Sunnova Energy International are also poised to benefit from a split Congress, as this would ensure the IRA’s continued implementation. Strouse also sees potential upside if the Foreign Entity of Concern (FEOC) limits expand, as this would further favor US-based renewable companies with a domestic content advantage.
Uncertainty Looms for Offshore Wind and EV Charging:
While Strouse is optimistic about the core solar sector, he cautions that a Republican sweep could create more uncertainty for emerging markets like offshore wind and EV charging infrastructure. Investors may be hesitant to invest in these sectors until policy clarity emerges.
Overall Outlook:
Despite the potential for volatility, Strouse believes that the fundamentals for major solar players like First Solar, NextEra, and Enphase remain strong regardless of the election outcome. Investors should closely monitor the market reaction following the election, especially if First Solar experiences a favorable political scenario.The upcoming election is set to be a defining moment for the renewable energy sector. As we approach Election Day, keep a watchful eye on these key players and prepare for potential market shifts.