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Morgan Stanley bullish on solar!

Morgan Stanley says picks can draw 'multi-decade' tailwind from new climate policy

Apr. 23, 2021 6:10 PM ETSunrun Inc. (RUN)By: Jason Aycock, SA News

President Biden's Leaders Summit on Climate resulted in a reassertion of the United States' role in the global climate conversation, Morgan Stanley notes - and it came with a target for America to reduce domestic greenhouse gases by 50%-52% by 2030.

That's the latest in executive action coming from the Biden administration on climate change, and it prompted the firm to reassess sectors (including utilities, clean tech, autos and shared mobility, multi-industry and energy) to see which companies might draw from a "multi-decade secular tailwind" for those able to most efficiently de-carbonize the economy.

The U.S. has lagged the "green" recovery while other countries broadly embraced emissions reductions targets - led so far by the European Union, the firm says - but now a regime change is under way.
That's included a number of sweeping executive orders that could add up to policy creating a "more stringent regulatory backdrop for domestic energy," focused on upstream and midstream federal permitting, methane regulations, and vehicle fuel efficiency standards.

But a more recent proposal for infrastructure reconciliation is heavily characterized by investing in energy transition and climate change resilience, including a lengthy list of low-carbon tech, it notes. And the SEC is now taking an unusually proactive approach to addressing ESG disclosure and climate risk.

Looking across various sectors, Morgan Stanley says its top picks for this theme include Sunrun (NASDAQ:RUN), Aptiv (NYSE:APTV), American Electric Power (NASDAQ:AEP), Johnson Controls International (NYSE:JCI), and Occidental Petroleum (NYSE:OXY).

In Clean Tech, it notes Sunrun is a best-in-class rooftop solar/storage developer that has significantly accrued value from current customers to go along with high growth in net earnings assets and a growing "wedge" of rising utility costs while its own costs fall. Other recommended stocks there with high "growth disconnect" are Atlantica Sustainable Infrastructure (NASDAQ:AY), SolarEdge Technologies (NASDAQ:SEDG), TPI Composites (NASDAQ:TPIC), and AES.

In Autos/Shared Mobility, it's highlighted Aptiv due to "underappreciated growth and exposure to secular tailwinds in EVs and autonomous vehicles." But in this area, it's also overweight General Motors (NYSE:GM), Tesla (NASDAQ:TSLA) and Fisker (NYSE:FSR).

https://seekingalpha.com/news/3685289-morgan-stanley-says-picks-can-draw-multi-decade-tailwind-from-new-climate-policy?mail_subject=run-gm-morgan-stanley-says-picks-can-draw-multi-decade-tailwind-from-new-climate-policy&utm_campaign=rta-stock-news&utm_content=link-3&utm_medium=email&utm_source=seeking_alpha