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Investors may want to consider betting on three downtrodden clean technology stocks situated to outperform the market as the year stretches on, according to JPMorgan. The bank is bracing for more downside risk as fears of an impending recession mount and amp up risk-off sentiment. But these stocks should benefit from favorable policy tailwinds, analyst Bill Peterson said in a Monday note to clients. “However, we continue to focus on and recommend investors to put in the work on PLUG , CHPT , and ENVX , for which expectations have been largely reset and for which we see the potential for relative outperformance as we move through the year,” he wrote. “From a sector view, we continue to prefer infrastructure enablers in hydrogen and charging over vehicle makers and component suppliers.” Support for hydrogen, electric vehicle charging and batteries following the Inflation Reduction Act should fueled strong demand for these stocks going forward, Peterson said. The recent pullback in many of these names also presents a “solid entry point” and favorable risk-reward for investors getting in for the long-run. “We think our top picks will largely be able to sustain their revenue growth outlooks on strong secular and durable demand trends, bolstered by government policy tailwinds such as the IRA in the US,” he wrote. One of those names is Plug Power, poised to benefit from demand trends fueled by the latest climate bills tax credits from the latest climate bill. While the Wall Street firm expects below consensus revenue expectation, Peterson anticipates “inflecting” margins in the second half of the year as manufacturing and scale improves, particularly within its electrolyzer segment. PLUG YTD mountain Plug Power shares in 2023 So far this year, the stock’s tumbled more than 28%. JPMorgan’s $20 price target suggests shares can more than double from Friday’s close. Another name JPMorgan is betting on long-term is ChargePoint as a longer-term clean tech winner. Despite the more than 10% slump in shares this year and concerns of a temporary delays in bringing chargers online, the company should seem first-quarter revenues in line with consensus expectations. While EV charging stations may come in lower, Peterson views the company as a “clear leader” in the North American Level 2 charging market that’s situated for significant growth in the years ahead. ENVX YTD mountain Share performance in 2023 Peterson also named Enovix among the investment bank’s clean tech picks situated to capitalize on massive demand for batteries and favorable government policy. JPMorgan’s $18 price target implies about 66% upside for the battery stock from Friday’s close. “Enovix is well positioned to capture design wins with strategic customers in the consumer electronics space and drive significant revenue growth in the coming years given the improved performance and safety advantages of its battery cell,” he said. “We think product differentiation and meaningful scale will drive margin expansion and long-term profitability.” — CNBC’s Michael Bloom contributed reporting
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