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MARKETS LIVE BLOG:

STOCKS CLIMB AS RATE-HIKE FEARS FADE, WITH APPLE ON DECK

Wall Street bracing for drop in revenue, potentially hefty pullback in iPhone sales in China

Unloved clean energy stocks rise as Fed signals rate cuts in 2024

Jeff Lagerquist
·2 min read
Clean energy stocks have slumped as rising interest rates choked access to capital to bankroll new solar, wind, and other forms of green energy projects.
Clean energy stocks have slumped as rising interest rates choked access to capital to bankroll new solar, wind, and other forms of green energy projects. (Luis Alvarez via Getty Images)

Slumping clean energy stocks have sprung to life in the wake of the Federal Reserve’s forecast for three interest rate cuts in 2024.

The S&P Global Clean Energy Index (^SPGTCLEE), a U.S.-weighted basket of 100 clean energy-related stocks, climbed about four per cent on Thursday. First Solar (FSLR), Enphase Energy (ENPH), and SolarEdge Technologies (SEDG) shares added more than 10 per cent in late-morning trading.

In Canada, shares of Vancouver-based fuel-cell maker Ballard Power Systems (BLDP.TO)(BLDP) and Toronto-based renewable energy producer Northland Power (NPI.TO) gained about four per cent.

Clean energy stocks have slumped as rising interest rates choked access to capital to bankroll new solar, wind, and other forms of green energy projects. It was a different story three years ago, when many investors were focused on U.S. President Joe Biden’s clean energy spending plans, and growing climate change awareness in financial circles.

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CIBC Capital Markets analyst Mark Jarvi says valuations for clean energy stocks have crashed since their peak in early 2021.

“Over the course of three years, we’ve gone from euphoric sentiment and peak valuations . . . to overly discounted (in our view) conditions today,” he wrote in a note to clients earlier this week, prior to the Fed’s decision. “2023 was a challenging year, with very poor share price performance for the renewable and power companies we cover.”

For 2024, Jarvi says he’s taking a cautious stance on the sector, naming Quebec-based renewable power supplier Boralex (BLX.TO), and Northland Power as top picks.

“We cannot say with any certainty a recovery is likely to happen in 2024, and the sector could be vulnerable to a further check back if bond yields reverse higher and there are more negative headlines,” he wrote. “Overall, we believe lower rates/yields could have both a qualitative and quantitative benefit on the sector.”

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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