«Green» stocks will benefit from the Fed rate cut

According to Citi Research, the clean energy sector disappointed many investors after easy access to capital was limited. However, analysts believe that a reversal of the Fed's policy and a reduction in interest rates could be a catalyst for broader promotion of green energy.

Although Citi is not calling for massive stock purchases in this sector, experts see opportunities for profitable companies that can benefit from sustainable investment trends. Corporate attention to environmental initiatives has become an integral part of the business, expanding opportunities for growth in this segment.

Political factors may also have an impact: a democratic administration supports the development of clean technologies, but deficit spending is likely to be limited. Republicans are unlikely to repeal the Inflation Reduction Act (IRA), but deregulation and tax measures can make «green» projects more attractive.

Despite this, Citi does not believe that only rates and political factors will be able to support the sector in the medium term. The experts focused on companies with positive cash flow, sustainable profitability and accelerating sales figures. The areas of «clean water», energy efficiency and nuclear energy are considered the most promising, while electric vehicles and energy storage may face difficulties.

Citi has included shares of Ecolab and IDEX Corporation in the list of recommended purchases, noting their moderate sensitivity to rates and policies.