Maki Nakamura
There is a new era of “green energy” that has a focus on cash generation and visible profitability.
The Fed pivot towards lower rates could be a catalyst of this theme, but longer-run, the fundamentals will be on its side, Drew Pettit, director of U.S. Equity Strategy at Citi, said in a note.
The themes that look more attractive include clean water, energy efficiency, and nuclear energy, none of which are politically sensitive, when looking at positive cash flow, profitability, and sales/EBITDA growth acceleration, according to Citi.
“Data shows that while clean investment from the energy industry has tailed off in recent quarters, manufacturers and retail consumers have continued to spend on environmentally conscious initiatives,” said Pettit.
The following are the 35 stocks that screen the most attractive from Citi’s “green” universe.
Citi analysts looked for three key characteristics: a positive cash generation to ward off potential funding issues; a visible path to profitability to entice greater institutional ownership; and areas where sales and/or EBITDA growth is set to inflect higher and accelerate through 2026.
These are the stocks found to encompass all three:
- Agilent Technologies (A)
- ABM Industries (ABM)
- Albemarle (ALB)
- Ardagh Metal Packaging (AMBP)
- Air Products and Chemicals (APD)
- Aris Water Solutions (ARIS)
- Ball (BALL)
- Bloom Energy (BE)
- BWX Technologies (BWXT)
- Cummins (CMI)
- Cintas (CTAS)
- Donaldson (DCI)
- Ecolab (ECL)
- Consolidated Edison (ED)
- Energy Recovery (ERII)
- Franklin Electric Co (FELE)
- Ferguson Enterprises (FERG)
- Graphic Packaging Holding (GPK)
- Heartland Express (HTLD)
- IDEX (IEX)
- Linde (LIN)
- Ormat Technologies (ORA)
- PotlatchDeltic (PCH)
- Perma-Fix Environmental Services (PESI)
- Rayonier (RYN)
- SolarEdge Technologies (SEDG)
- Shoals Technologies Group (SHLS)
- Stericycle (SRCL)
- The Timken Co (TKR)
- Tesla (TSLA)
- Veralto (VLTO)
- Waters (WAT)
- Advanced Drainage Systems (WMS)
- Williams-Sonoma (WSM)
- Zurn Elkay Water Solutions (ZWS)