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JPMorgan’s Top Clean Energy Picks for the Remaining of 2024

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The clean energy sector is facing a volatile second half of the year due to higher interest rates and uncertainty surrounding future regulations, according to JPMorgan analysts. However, the industry is experiencing growth as the role of renewables in powering data centers is underestimated and benefits from the Inflation Reduction Act are not fully reflected in stock prices. JPMorgan’s top picks for the remainder of the year are Hannon Armstrong Sustainable Infrastructure and TPI Composites, smaller companies that focus on financing renewable projects and building wind turbine blades. Both stocks have seen significant gains in the past three months and have price targets that suggest further upside.

Hannon Armstrong is well-positioned in the current interest rate environment, able to capitalize on yield curve movements to generate earnings. The company’s diversified asset portfolio and ability to adapt to changing market conditions make it a strong candidate for growth, according to JPMorgan analysts. Additionally, Hannon Armstrong offers an above-average market yield of 5.2%, providing investors with a steady income stream. TPI Composites has faced challenges due to higher financing costs caused by rising interest rates, but JPMorgan expects improvements in volumes and margins in the second half of the year as customer demand increases.

On the solar side, utility-scale projects are seeing high demand, with companies like Nextracker and First Solar standing out as top picks. First Solar has a significant backlog that provides stability, while Nextracker is the leading supplier of sun trackers with exclusive exposure to the utility market. Both stocks have seen gains in recent weeks, with JPMorgan raising price targets to reflect their growth potential. However, increased competition in the U.S. market could impact First Solar’s competitive advantage, potentially lowering the multiple investors assign to the company’s core operational business.

Overall, the clean energy sector is experiencing growth despite challenges posed by higher interest rates and regulatory uncertainty. Companies like Hannon Armstrong and TPI Composites are well-positioned to capitalize on market opportunities and deliver strong returns for investors. In the solar space, utility-scale projects continue to drive demand, with Nextracker and First Solar leading the pack. While there are some concerns about increased competition affecting First Solar’s competitive advantage, the industry as a whole remains optimistic about future growth and profitability. Investors looking for exposure to the clean energy sector may consider these top picks from JPMorgan analysts for the remainder of the year.

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