Election 2024: Where To Put Your Money Ahead of the Vote

In this recurring series, The Fly recaps where the top analysts on Wall Street say to put your money ahead of November’s U.S. presidential election. In this edition, RBC Capital comments on energy issues and people to watch ahead of the 2024 election. Meanwhile, Morgan Stanley says a potential Trump win is more likely positive for First Solar (FSLR).

ENERGY ISSUES AND PEOPLE TO WATCH: The Republican promise of the return of “drill, baby, drill” and the defunding of the electric vehicle “mandate” on day one and the elevation of Vice President Kamala Harris as the Democratic nominee for president will provide voters with a stark contrast on energy and climate policy, RBC Capital said in a research note on Tuesday. Harris’s records as California Attorney General and Senator, as well as her 2020 presidential primary campaign, seemingly place her to the left of Biden on energy and climate issues, RBC said, adding that during the 2020 primaries, Harris called for a ban on fracking, and in 2016 as AG, she sued the Obama Department of the Interior to prevent fracking off the California coastline, calling it “a threat to the health and wellbeing of California.” During the primaries, she also proposed a $10T plan to combat climate change and called for a carbon tax. A Harris administration would also ensure the continuity of existing Inflation Reduction Act provisions that are under attack by Trump, including the electric vehicle consumer tax credit, RBC argued.

Publicly traded companies that may be impacted by the initiatives may include Baker Hughes (BKR), Halilburton (HAL), Chevron (CVX), BP (BP), Devon Energy (DVN), ExxonMobil (XOM), ConocoPhillips (COP), and Schlumberger (SLB). Publicly traded companies in the EV space include Tesla (TSLA), Rivian (RIVN), Nio (NIO) and XPeng (XPEV).

FIRST SOLAR: Shares of First Solar are down 12% since the first presidential debate in June and 27% from its peak, but Morgan Stanley thinks perceived repeal risks of the IRA are “overblown” and that potential benefits from trade protection under a Republican president are “underappreciated.” The firm, which has an Overweight rating and $331 price target on the shares, thinks a potential Trump administration “may more likely represent a positive than negative outcome” for First Solar, but feels the risk of a full-scale IRA repeal is “very low.” Morgan Stanley believes the domestic manufacturing tax credits won’t be a target for Republicans as the Republican Party has made it a priority to become a “Manufacturing Superpower” and 90% of the investment dollars are being deployed in Republican-controlled districts and creating local manufacturing jobs, which has resulted in bipartisan support for these provisions.

Additionally, Morgan Stanley said that demand for renewables is a “powerful” force, and that new sources of demand can outweigh the risk of changes to wind and solar. The utility industry is seeing new sources of electricity demand stemming from manufacturing, data center power use, crypto mining, oil and gas electrification, and industrial activity, all of which should continue, and will require an increased build-out of new generation, much of which should be met by renewables, Morgan Stanley said. Even if subsidies decline and economics worsen, the need for renewable power will continue to grow, the firm argued.

Morgan Stanley sees fairly limited downside to where First Solar is trading even in an unlikely IRA repeal scenario.