Citigroup, a Wall Street bank, has identified two stocks that still have good growth prospects in the changing interest rate environment or political situation. Citigroup's research is expected to be released later this month ahead of the possible Fed rate cut and the upcoming November US election. The investment bank stated in a client report on August 30th that three directions in the green energy sector - clean water, energy efficiency, and nuclear energy - have lower sensitivity to interest rates and politics, attracting investor attention.

Ecolab, a water treatment and sanitation company in Minnesota, and IDE Corp, an infrastructure engineering company, have been included in their "Theme 30" recommended list. Citigroup analyst Drew Pettit said, "It is unlikely that the mid-term performance of 'green' stocks will be supported solely by interest rate and political catalysts. Therefore, we focus on three key fundamentals: positive cash flow, visible profitability, and accelerated growth in sales/EBITDA."

Citigroup describes Ecolab as having "positive free cash flow" and "profitability", and expects its sales and earnings to continue to grow until 2026. The Wall Street bank upgraded Ecolab's rating from "neutral" to "buy" in July, with a target price of $265. At the same time, Citigroup expects IDE Corp to rise by about 35% in the next 12 months, reaching $277 per share.

Citigroup believes that as many clean energy stocks that entered a "mini-bubble" in 2021 "completely pull back", fundamentals will become more important to stock market investors. "Some companies have even filed for bankruptcy. Currently, more than 20 stocks have dropped by more than 80% from their five-year highs. One-fourth of 'green energy' stocks have dropped 60% or more from their post-pandemic peak," analysts said.

The investment bank also believes that these two stocks will not be affected by political changes in November. "The Democratic platform is more supportive of long-term green initiatives and will enact policies to mandate or accelerate the adoption of certain 'green' technologies," Citigroup analysts said. The bank's analysts also believe that former President Donald Trump publicly supported the oil and gas industry and is unlikely to withdraw support for new energy companies, affecting Ecolab and IDE Corp.

"For Republicans, Trump has discussed abolishing the Inflation Reduction Act (IRA), but we believe this is unlikely as a large amount of expenditure goes to Republican-controlled congressional districts. The comprehensive attack on renewable energy is more like campaign rhetoric, as certain areas urgently need short-term power supply increases due to the growth in data center power demand," the analyst added.