Donald Trump made energy a central part of his presidential campaign. While it is still too early know exactly how the president-elect will proceed when he takes office in January, some clear winners and losers emerge if his platform is taken at face value. Trump has promised unbridled fossil fuel production — ” drill, baby, drill ” — vowing to fight inflation by reducing energy costs. He has also generally backed nuclear power, though he expressed some skepticism in his October interview with Joe Rogan. The only mention of renewable energy in Trump’s campaign platform is a threat to terminate the “Socialist Green New Deal,” his description of the Inflation Reduction Act. Trump’s focus on fossil fuels and low regard for renewables could bring disruption to the energy space. These stocks are likely winners and losers. The clearest winner: Gas Stocks exposed to natural gas emerge as some of the clearest winners, according to post-election notes by JPMorgan and Jefferies. “Under a more carbon-agnostic agenda, we would […] expect the Trump administration to be more supportive of gas generation,” JPMorgan analyst Kevin Kwan told clients in a Wednesday note. Vistra Corp . has soared to the top of the S & P 500 this year on expectations that it will clinch a deal to power data centers with one of its nuclear plants. But the company has significant gas generation assets and would be poised to benefit under the fossil-fuel friendly Trump administration, according to JPMorgan. Vistra shares closed more than 3% higher Wednesday in the wake of Trump’s election victory. GE Vernova is one of the clearest winners, according to Jefferies analysts. While GE Vernova is often considered a “clean” company, it manufactures and services gas turbines, the analysts said. This sets the company up to benefit from the power demand trend through exposure to the fossil fuel sector, they added. GE Vernova gained more than 6% Wednesday. Cheniere also stands to benefit through potentially easier liquid natural gas production under Trump, Jefferies found. On the flip side, however, prices could decline on increased supplies of U.S. liquified natural gas as well as Russian gas if Trump ends the war in Ukraine, according to the firm. Cheniere gained nearly 3% on Wednesday. The clearest loser: Renewables Residential solar stocks face some of the highest risk with Trump’s threats against the IRA, according to Jefferies. With Senate in GOP hands, the question now is who will win control of the House and whether the GOP will seek to sunset tax key credits. Sunrun and Sunnova are the most exposed and unable to meaningfully mitigate risk, according to Jefferies. The stocks tanked 29% and 51%, respectively, on Wednesday. Inverter manufacturers Enphase and SolarEdge may also take another leg lower, according to the firm. Enphase dropped nearly 17%, and SolarEdge lost about 22% on Wednesday. NOVA 5D mountain Sunnova in the past five days Jefferies also expects a stock drop for NextEra Energy , the largest renewable developer in the U.S. The company, however, is also exposed to the data center and power demand trend, which is likely to continue. “The question will be if there is a ‘buy the dip’ phenomena as there could be the ‘going out of business’ pull forward of demand like under the 2016 Trump administration,” Jefferies analyst Julien Dumoulin-Smith wrote. A Goldman analysis this week found that First Solar, Array and SolarEdge are most exposed to IRA benefits as a percentage of their estimated non-GAAP earnings per share. Nuclear: Bipartisan support Nuclear has won bipartisan legislative support under the Biden administration. Trump’s campaign platform backs nuclear, though the mention is brief without any details. It’s worth noting that Trump did express some skepticism toward nuclear power in a recent interview with Joe Rogan: “They get too big and too complex and too expensive,” the president-elect said of large reactors. Trump appeared to support smaller and cheaper nuclear plants that are easier to deploy. This is potentially a good sign for small modular reactor development, though it’s too early too tell. Power demand is growing quickly, though, and the electric grid needs new capacity. Jefferies expects the recent spate of announced investments in new or restored nuclear to continue. “We anticipate dialogue on new nuclear to continue to accelerate regardless of the new administration given challenges of new load. Expect progress to continue on permitting,” the Jefferies analysts said.
