Citi US stock strategist Drew Pettit said that as the Fed is about to cut interest rates, the prospects for clean energy infrastructure are expected to be boosted, and the market will enter a new era of "green investment".
According to the IntelliNews app, Citi US stock strategist Drew Pettit said that as the Fed is about to cut interest rates, the prospects for clean energy infrastructure are expected to be boosted, and the market will enter a new era of "green investment".
Drew Pettit said, "Lower interest rates should help green energy stocks. I do believe that we are actually seeing a fundamental turnaround in these stocks in the long term, and their growth should accelerate again and surpass the large cap. Therefore, short-term catalysts can bring us back to green investment, and long-term catalysts can sustain the performance of these companies."
Drew Pettit believes that the industrial sector will definitely play a role in this new era, "I actually believe that the industry has played a huge role in the green transformation. We need to improve and change the manufacturing process so that we can effectively use our resources. Therefore, the industry is an important part of the green revolution."
It is worth mentioning that Citi recently included water treatment and sanitation company Ecolab (ECL.US) and infrastructure engineering company IDE Corp (IEX.US) in its "Theme 30" recommended list, stating that these two stocks still have good development prospects in the interest rate environment or political changes.
In a client report at the end of August, Citi stated that three directions in the field of green energy-water purification, energy efficiency, and nuclear energy-have a lower sensitivity to interest rates and politics, attracting investor attention. Drew Pettit said, "It is unlikely that the mid-term performance of 'green' stocks will rely solely on interest rate and political catalysts. Therefore, we focus on three key fundamental characteristics-positive cash flow, visible profitability, and accelerated growth of sales/earnings before interest, tax, depreciation, and amortization (EBITDA)."
Citi describes Ecolab as having "positive free cash flow" and "profitability", and expects its sales and earnings to continue to grow until 2026. The bank raised its stock rating on Ecolab from "neutral" to "buy" in July, with a target price of $265. At the same time, Citi expects IDE Corp to rise by about 35% in the next 12 months to $277 per share.