The sustainability theme faces an uncertain future under President-elect Donald Trump, but Morgan Stanley lists some stocks with significant upside. The Wall Street bank uses the following criteria to determine its top stocks: an Overweight rating, more than 5% upside from Morgan Stanley’s price target; a market capitalization of more than $2 billion; sustainable-themed revenue or capital spending. Here are two of Morgan Stanley’s top stocks with upside potential of over 60%: EDP Renovaveis The investment bank is bullish on EDP Renovaveis with a price target of €18 ($18.68), giving it nearly 66% upside potential. The Spanish pure-play renewable energy company operates wind and solar power plants primarily in the United States and Europe. Morgan Stanley analyst Arthur Sitbon noted that the stock is currently “undervalued” following the recent presidential election, with the market implicitly assigning no value to the group’s U.S. activities ”. The energy industry has been in the spotlight given Trump’s desire to combat inflation by lowering energy costs but also because he has placed less emphasis on renewable energy. Nonetheless, Sitbon said EDPR is “well-positioned to seize value-added opportunities in renewable energy”. This is because “renewable energy market fundamentals are improving in both Europe and the United States (strong demand for clean energy from big tech companies),” he added. “We also believe that concerns that U.S. IRAs may be revoked are overblown.” EDP’s shares are listed on Euronext Lisbon, Portugal, and trade as American Depositary Receipts under the ticker EDRVY. RWE Also on Morgan Stanley’s list is German power company RWE, which it describes as a “global leader in renewable energy.” Rob Pulleyn, an analyst at the bank, believes RWE is “oversold on lower electricity prices in early 2024 and concerns about value creation from renewable energy.” Looking ahead, he “remains confident in the value creation potential of the company’s renewable energy investments” due to the strength of the power purchase agreement market and healthy demand for artificial intelligence and data centers. RWE’s shares are listed on the Frankfurt Stock Exchange and trade in the United States under American Depositary Receipts under the symbol RWEOY. Morgan Stanley has a price target of 50 euros ($169.50) on the Frankfurt-listed stock, giving it a potential upside of nearly 60%. —CNBC’s Michael Bloom contributed to this report.
Here are Morgan Stanley’s top picks with upside potential of more than 50% | Real Time Headlines
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