Wall Street bank Citi has identified two stocks it believes can outperform regardless of changes in the interest rate environment or the political landscape. Citi’s research comes ahead of potential interest rate cuts by the Federal Reserve this month and the upcoming US election in November. The investment bank said three areas in the green sector – clean water, energy efficiency, and nuclear energy – “less level / politically sensitive” and attractive for investors, in a note to clients on August 30. Ecolab, Minnesota-based company water purification and hygiene and company IDEX infrastructure engineers are two stocks added to the “Thematic 30” recommended list. “Tariff and political catalysts alone cannot sustain “Green” stocks medium-term,” said Citi analyst Drew Pettit. “Therefore, we focus on three key fundamental characteristics: positive cash flow, visible profitability, and accelerating sales/EBITDA growth.” Ecolab and IDEX are described by Citi as “free cash flow positive” and “profitable,” with sales and earnings expected to grow through 2026. The Wall Street bank upgraded Ecolab to “buy” from “neutral” in July with a price target of $ 265. Meanwhile, IDEX is expected to rise about 35% to $277 a share over the next 12 months, according to Citi. Citi’s ECL 1Y line believes the fundamentals will be more important for stock market investors going forward as many clean energy stocks that rose to a “micro bubble” in 2021 have “completely collapsed”. “Some have even filed for bankruptcy. Currently, more than 20 stocks are down more than -80% from their 5-year high. A quarter of “Green” stocks are down -60% or worse from their post-pandemic peak,” the analyst said. The investment bank also sees both stocks unaffected by changes in the political landscape in November. “The Democratic platform contains stances that are more supportive of long-standing green initiatives, and policies that would force or accelerate the adoption of certain “Green” technologies,” Citi analysts said. Analysts of the bank also believe that former President Donald Trump, who has been vocal about supporting the oil and gas industry, is unlikely to withdraw support for new energy companies and cause Ecolab and IDEX. “For the Republican Party, former President Trump has discussed the cancellation of the Inflationary Reduction Act (IRA), but we believe this is unlikely because a disproportionate amount of spending has flowed into Republican-controlled congressional districts. A complete attack on renewable energy looks like a campaign .rhetoric because there is a need to increase power in certain areas of the data center’s electricity demand,” the analyst added.
Citi mentions 2 green stocks that will not be affected by interest rates, political changes
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