As sustainable investing faces mixed signals heading into 2025, select stocks are well-positioned to benefit from ESG catalysts.
While broader sustainable funds underperformed the market in 2024, opportunities still exist in stocks that are tapping into green growth trends.
JPMorgan analysts say these stocks are poised to benefit from macro tailwinds as sustainable investing continues to evolve.
Electric Vehicles, Charging Networks: EVgo Inc (NASDAQ:EVGO)
According to JPMorgan, the electric vehicle (EV) boom is far from over, and EVgo stands to capitalize on it. As the adoption of EVs continues to rise, EVgo's charging network is set to see more traffic, driving revenue growth. With an expanding customer base and supportive government policies pushing for increased charging infrastructure, EVgo is poised for solid growth in 2025.
JPMorgan analysts are bullish on the stock, and with the EV sector gaining momentum, EVgo is expected to be one of the top ESG picks.
Green Energy and Hydrogen: Plug Power Inc (NASDAQ:PLUG)
Plug Power is another key player in the clean energy sector. The company's focus on hydrogen fuel cells positions it well for a significant revenue inflection in 2025, especially with the anticipated finalization of the IRA 45V production tax credit guidance. This could unlock stalled projects, particularly electrolyzers, that would drive higher revenue growth.
According to JPMorgan, Plug Power's strategic positioning in green energy solutions, combined with potential tax incentives, makes it an exciting pick for ESG-focused investors looking to benefit from the green transition.
Read Also: Plug Power’s $20 Billion Revenue Ambition Faces Obstacles, Analyst Says
Building Materials & Green Construction: TopBuild Corp (NYSE:BLD)
The building materials sector is seeing a shift toward sustainability, and TopBuild is set to benefit. New U.S. Department of Housing and Urban Development (HUD) regulations coming into effect in 2025 will require single-family and low-rise multi-family homes to meet stricter energy efficiency standards. TopBuild, as a distributor and installer of insulation, is well-positioned to benefit from these changes.
JPMorgan analysts note that with green building demand on the rise, TopBuild's exposure to sustainable construction trends offers solid long-term growth potential.
Recycled Materials & Eco-Friendly Products: The AZEK Co Inc (NYSE:AZEK)
AZEK is making moves in the building products sector with a focus on sustainability. The company's increased use of recycled PVC and PE materials in its products aligns with the growing demand for eco-friendly construction materials. With green building trends on the rise, AZEK's commitment to sustainability positions it to gain market share in 2025 and beyond.
JPMorgan highlights AZEK as a solid choice for investors looking to tap into the demand for green building solutions.
Green Hydrogen: Air Products & Chemicals Inc (NYSE:APD)
For investors seeking exposure to large-scale green energy projects, Air Products & Chemicals is one to watch. The company is involved in several high-profile green hydrogen initiatives, including the NEOM project in Saudi Arabia and a blue hydrogen facility in Louisiana. With demand for clean hydrogen expected to surge in the coming years, APD's ability to scale its projects and secure long-term contracts could drive substantial earnings growth.
JPMorgan analysts believe that while there may be short-term volatility, APD is poised for strong long-term performance in the ESG space.
ESG Catalysts Ahead In 2025
While sustainable funds struggled in 2024, several key stocks are primed to benefit from macro trends in 2025, according to JPMorgan.
From EV charging networks to green hydrogen and eco-friendly construction, these stocks are tapping into growth areas with strong ESG catalysts.
As long as performance continues to drive these sectors forward, JPMorgan analysts believe ESG-focused investors have much to look forward to in the year ahead.
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