As we move into the second half of 2024, the clean energy sector is ripe with opportunities despite the current volatility. According to insights from JPMorgan analyst Patrick Jones, the sector is positioned for positive surprises in the coming year.
Here are three under-the-radar clean energy stocks with strong upside potential, irrespective of political changes in the White House.
HASI Capital
Hannon Armstrong Sustainable Infrastructure Capital Inc HASI is a climate investment firm that partners with clients to deploy assets supporting the energy transition. They invest in distributed energy projects, renewable energy sources like solar and wind, and sustainable fuels and transport initiatives. The company stands out due to its diverse end-market exposure.
Recently earning an investment grade rating from Fitch, HASI is poised to benefit from a lower cost of capital. This development should support the company's guidance and catalyze stable spreads.
Furthermore, HASI’s decreasing reliance on public capital raises “should reduce negative "surprises"”, making it a compelling pick in the clean energy sector.
TPI Composites
TPI Composites Inc TPIC, though smaller in market cap, has significant growth potential. The company manufactures composite wind blades and structures for buses, rail, theme parks, and trucks. It operates in the wind energy and transportation industries. The company has segments in the U.S., Asia, Mexico, EMEA and India, with Mexico contributing the most revenue.
The company's wind turbine blade business is set to gain from improved order activity from wind OEMs, which has been increasing over the past year. The visibility into domestic content bonus adders under the Inflation Reduction Act (IRA) could spur further orders and potential manufacturing expansions.
These factors make TPI Composites an attractive under-the-radar stock with promising catalysts ahead.
Prysmian Group
Prysmian Group SpA PRYMF PRYMY is an Italian manufacturer of power and telecom cables. It operates in three segments: Projects (cable projects), Energy Products (power distribution), and Telecom (connectivity products). Following its acquisition of Encore Wire, the company now derives most of its earnings from North America.
The company is well-positioned to capitalize on the electrification trends driven by data centers, mega projects, grid investments and the IRA. Prysmian's potential for capacity expansion further adds to the upside risk, making it a strong contender in the clean energy space.
Read Also: What A Biden Or Trump Victory Might Mean For The Energy Sector
Jones highlights that while renewable deployments are expected to grow in 2024, the growth prospects vary across different markets. In the U.S., utility-scale solar projects show promising growth due to extensive backlogs. However, the China solar market might see flat installations due to high comparables from 2023 and grid bottlenecks. Meanwhile, the global wind industry is recovering from years of stagnation, supported by declining input costs and favorable policies.
Despite the anticipated volatility from the upcoming U.S. election cycle and polarized energy policy debates, the long-term growth trajectory of the clean energy sector remains intact. These under-the-radar stocks, with their strategic positioning and growth catalysts, offer substantial upside potential for investors looking to capitalize on the evolving clean energy landscape.
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