Clean Energy Analyst Names Top 4 Stock Picks, Prefers 'Simple Stories And Stocks With Structural Tailwinds'

Clean energy stocks are off to a shaky start to 2023, but Bank of America analyst Julien Dumoulin-Smith named his four top clean energy stock picks on Friday.

Earnings Season Takeaways: Now that the first-quarter earnings season is complete for clean energy stocks, Dumoulin-Smith listed four major takeaways for investors:

• Investors were spooked by mixed residential solar demand.
• Cash burn is a major focus for investors.
• Rate of change in sales volumes is a key differentiator.
• Investors prefer simple plays over complex ones.

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Dumoulin-Smith said he preferred simple stories and stocks with structural tailwinds heading into the second quarter.

"Heading into 2Q23 we see domestic content as the key policy angle to watch and CA origination trends in resi solar as the key demand barometer," he said.

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Top Stock Picks: He said investors looking to buy the dip in clean energy stocks should focus on top picks Sunrun Inc (NASDAQ: RUN) and Sunnova Energy International Inc (NYSE: NOVA). In addition, he recommends Array Technologies Inc (NASDAQ: ARRY), Nextracker Inc (NASDAQ: NXT) and FTC Solar Inc (NASDAQ: FTCI) as stocks to buy with attractive valuations and high exposure to accelerating order books.

"The more recessionary the backdrop, the more the IRA subsidies should shine and make these companies more attractive," Dumoulin-Smith said.

Benzinga's Take: Not only do clean energy stocks allow investors to put their money at work in promoting a cleaner environment, but they have also outperformed the market in recent years. In fact, the iShares Global Clean Energy ETF (NASDAQ: ICLN) has outperformed the SPDR S&P 500 ETF Trust (NYSE: SPY) by 29% over the past three years.

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