2024 U.S. Presidential Election Impact on Solar Stocks: RBC Capital Analysis Reveals Buying Opportunities
As we approach the 2024 U.S. presidential election, investors are closely watching the potential impact on solar stocks, according to RBC Capital. Analysts at the bank have provided a detailed analysis, suggesting that the current environment may present a buying opportunity, particularly for select names less exposed to the Inflation Reduction Act (IRA) or those that could benefit from protectionist policies under a Republican administration.
Clean energy stocks have underperformed year-to-date, with the iShares Global Clean Energy ETF (ICLN) down approximately 13%, trailing the market by 29%. RBC points out that this decline intensified following the presidential debate, where Republican support surged.
While the prospect of a Republican victory has raised concerns about the future of the IRA, RBC analysts believe a full repeal is unlikely due to bipartisan support for job-creating benefits in non-Democratic districts. However, the uncertainty surrounding potential partial repeals remains a concern.
RBC highlights that domestic manufacturers like First Solar (FSLR) might benefit from increased protectionist policies. On the other hand, companies reliant on foreign imports, such as Enphase (ENPH), Shoals (SHLS), and SolarEdge (SEDG), could face challenges due to higher input costs from tariffs. The Biden administration's approach has favored incentives over tariffs, benefiting companies that rely on cheaper imports.
Despite the potential headwinds and increased volatility under a Republican administration, RBC sees strong state-level support for renewable energy requirements. This support could drive growth in the sector regardless of the outcome of the presidential election.
Analysis:
The upcoming 2024 U.S. presidential election could have a significant impact on solar stocks, with potential buying opportunities for investors. Clean energy stocks have underperformed this year, but certain companies may benefit from protectionist policies or incentives depending on the election outcome. It is essential for investors to closely monitor the evolving political landscape and its implications for the renewable energy sector to make informed investment decisions.