With sustainable investing facing mixed signals in 2025, select stocks are well positioned to benefit from ESG catalysts.
While broader sustainable funds underperformed the market in 2024, there are still opportunities in stocks that take advantage of green growth trends.
JPMorgan analysts say these stocks will benefit from macro tailwinds as sustainable investing continues to evolve.
Electric vehicles, charging networks: EVgo Inc EVGO
According to JPMorgan, the electric vehicle (EV) boom is far from over and EVgo stands to benefit. As electric vehicle adoption continues to increase, EVgo's charging network is expected to see more traffic, leading to revenue growth. With a growing customer base and supportive government policies pushing for improved charging infrastructure, EVgo is poised for solid growth in 2025.
JPMorgan analysts are bullish on the stock, and with the EV sector gaining momentum, EVgo is likely to be among the top ESG picks.
Green energy and hydrogen: Plug Power Inc PLUG
Plug Power is another major player in the clean energy space. The Company's focus on hydrogen fuel cells positions the Company well for a significant revenue turnaround in 2025, particularly with the expected completion of the IRA-45V Production Tax Credit. This could unlock stalled projects, particularly electrolyzers, leading to higher revenue growth.
According to JPMorgan, Plug Power's strategic positioning in green energy solutions combined with potential tax incentives makes the company an exciting choice for ESG-focused investors looking to benefit from the green transition.
Also Read: Plug Power's $20 Billion Revenue Target Hits Obstacles, Analysts Say
Building Materials and Green Building: TopBuild Corp Stupid
The building materials sector is experiencing a shift towards sustainability and TopBuild will benefit from this. New U.S. Department of Housing and Urban Development (HUD) regulations taking effect in 2025 will require single-family homes and low-rise apartment buildings to meet stricter energy efficiency standards. TopBuild, as an insulation distributor and installer, is well positioned to benefit from these changes.
JPMorgan analysts note that TopBuild's exposure to sustainable construction trends offers solid long-term growth potential amid increasing demand for green building.
Recycled materials and eco-friendly products: The AZEK Co Inc Azek
AZEK operates in the building materials sector with a focus on sustainability. The increased use of recycled PVC and PE materials in its products meets the growing demand for environmentally friendly building materials. As the green building trend increases, AZEK's commitment to sustainability positions it to gain market share in 2025 and beyond.
JPMorgan highlights AZEK as a good choice for investors looking to capitalize on demand for green building solutions.
Green Hydrogen: Air Products & Chemicals Inc APD
For investors looking to participate in large green energy projects, Air Products & Chemicals is a must-watch. The company is involved in several high-profile green hydrogen initiatives, including the NEOM project in Saudi Arabia and a blue hydrogen plant in Louisiana. With demand for clean hydrogen expected to surge in the coming years, APD's ability to scale its projects and secure long-term contracts could result in significant earnings growth.
JPMorgan analysts believe that while there may be short-term volatility, APD is poised for strong long-term ESG performance.
ESG catalysts ahead in 2025
While sustainable funds struggled in 2024, several key stocks are poised to benefit from macro trends in 2025, according to JPMorgan.
From electric vehicle charging networks to green hydrogen and green building, these stocks tap into growth areas with strong ESG catalysts.
As long as performance continues to drive these sectors, JPMorgan analysts say ESG-minded investors have a lot to look forward to in the coming year.
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