Former Vice President Joe Biden has been gaining more ground over President Donald Trump in nationwide polls as the election rapidly approaches.
Biden has been consistently leading in national averages throughout the campaign, and the polls have been shifting even further in his favor following an ugly first debate between the two candidates as well as Trump’s COVID-19 diagnosis and subsequent hospitalization.
“The president’s hopes for re-election are growing dimmer by the day,” said Tim Malloy, pollster at Quinnipiac University.
In its latest poll Quinnipiac found Biden leading Trump by 11 percentage points in Florida, 13 points in Pennsylvania, and 5 points in Iowa. Two New York Times, Siena College polls found Biden leading by 6 points in Nevada and 1 point in Ohio. And Marquette University Law School’s latest poll has the Democrat up by 5 points in Wisconsin.
These poll numbers don’t bode well for Trump, and as Biden’s chances of winning have increased, so too has the probability of a Democratic sweep on election day.
With the odds of Democrats winning the presidency and Senate, and retaining the House rises, one group of stocks is trading like a sweep is inevitable: clean energy stocks.
“A Biden victory would add huge impetus to the transition” to a lower-carbon economy, said Simon Webber, portfolio manager for global equities at Schroders. “The growth outlook for electric vehicles, renewables, hydrogen power, battery storage and many more industries would be turbocharged.”
The TAN Invesco Solar ETF is up nearly 144% so far this year, sitting at highs not seen since 2011, and has gained more than 44% over the last month alone. Meanwhile, the XLE Energy Select ETF—which holds names like Chevron (NYSE: CVX) and Exxon Mobil (NYSE: XOM)—is down nearly -48% year-to-date by comparison.
Chantico Global CEO Gina Sanchez argued this week that clean energy stocks will see a significant boost in the case of a Democratic sweep.
“If you look at Biden’s plan, he announced in July a very comprehensive $2 trillion spending plan that would focus on… building a green, clean infrastructure and getting us to an equitable, clean energy future, and that is going to hit every aspect of the economy,” Sanchez said.
Sanchez says stocks like First Solar (NASDAQ: FSLR) and Sunrun (NASDAQ: RUN)—which just completed its acquisition of Vivint Solar—could benefit from not only direct government spending, but also other incentives to get individuals and businesses involved in the shift to clean energy sources.
“Even though there’s a lot of talk that these names are in a bubble, that this whole clean energy space has been on a run, $2 trillion is a tremendous amount of very real demand that will benefit these names,” as well as others, including Lithium Americas (NYSE: LAC), Sanchez added. “There’s a broad way to play this.”
But even if things don’t play out in the election as polls are indicating, MKM Partners’ JC O’Hara says there’s more to clean energy stocks’ process than just the outcome of November’s election.
“We’re always cautious to build a portfolio based off of what potential candidate may win the election and what policies may go into effect,” O’Hara said. “But we like to stick with existing trends, and… clean energy is a huge one and we think it’s a theme that’s accelerating and has plenty of room to run.”
“I think this clean energy theme is here to stay,” O’Hara added. “Finally, I think it’s important that clean energy is a theme, but that clean energy theme fits nicely into an even larger theme, and that’s ESG. Companies that have positive environmental, social and governance characteristics… have been huge beneficiaries of a lot of passive income, so, we don’t see that theme ending anytime soon, either.”