Sustainable Energy In Focus: Analyst Says Investors Should Buy These Stocks, Dump This

Investors are wondering which energy stocks to buy and which to dump.

While the new year has brought continued challenges for the sustainability sector, there could be “meaningful upside opportunity” heading into the Federal Reserve’s interest rate cutting cycle for the residential solar group and “incremental downside risk” to more nascent industries like hydrogen and fuel cells, analyst Jordan Levy of Truist Securities said in a note.

Check out other analyst stock ratings.

The Rating Changes

• Upgraded the rating for Sunnova Energy International Inc NOVA from Hold to Buy, while raising the price target from $10 to $18.
• Upgraded the rating for Enphase Energy Inc ENPH from Hold to Buy, while lifting the price target from $85 to $145.
• Downgraded the rating for Bloom Energy Corp BE from Hold to Sell, while reducing the price target from $12 to $9.

The Sustainability Thesis: As the 2024 Presidential election approaches, that spells headline risk to the entire group.

“We see more deeply engrained sectors such as utility-scale solar & biofuels carrying significantly less risk of policy reform vs. more nascent industries like Green Hydrogen,” Levy wrote.

Although valuations are currently at multiyear lows, this is the case “not only for subgroups that have seen significant downward revisions in growth expectations like resi solar (~41% avg. discount to 5-yr avg), but in areas where growth has held up more favorably i.e. utility-scale solar,” he added.

While some stocks that are trading at a discount is justifiable by their financial challenges or distress, “we see this broad valuation discount creating opportunities for upside” in some names, including Sunnova Energy International and Enphase Energy, the analyst further stated.

NOVA ENPH BE Price Action: Shares of Sunnova Energy International, Enphase Energy and Bloom Energy had risen by 7.18% to $11.20, by 4.47% to $111.94, and by 0.95% to $12.19, respectively, at the time of publication Tuesday.

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