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Goldman Sachs Identifies European Renewable Energy Stocks with Upside Potential
Renewable Energy Sector Poised for Rebound
Goldman Sachs recently named several European renewable energy stocks that it believes the market has overlooked. According to the bank, the sector is expected to bounce back after a period of declining returns. In a note to investors, Goldman Sachs stated that the growth in renewable energy is highly compelling, citing factors such as the European energy crisis, declining costs for wind and solar energy, and the EU's focus on mitigating climate change. The bank is buy-rated on stocks including RWE, Orsted, EDP Renewables, ENEL, and SSE, highlighting their upside potential in the expanding renewable energy market.
Strong Upside Potential for RWE
Goldman Sachs specifically pointed out German company RWE as one of the best-placed renewable energy storage developers to capture the expanding market in the US, Germany, and the rest of Europe. The analysts stated that the company's price target implies over 50% upside from current share price levels, making it an attractive investment opportunity.
New Beginning for Orsted
Danish company Orsted also received a buy rating from Goldman Sachs, with the bank stating that a recent meeting with investors could mark a new beginning for the company. The improved outlook on profits, leverage, and returns make Orsted an attractive investment option in the renewable energy sector.
Investment Opportunity in SSE
Scottish firm SSE is another Goldman Sachs favorite, primarily due to its investment in new projects. The bank sees higher power prices and thermal generation profits contributing to the company's cash flow, which in turn can unlock further value as the project pipeline builds.
Conviction List Stocks: EDP Renewables and Enel
Two of Goldman Sachs' stock picks, Spanish firm EDP Renewables and Italian firm Enel, are part of the bank's conviction list of most favored stocks. EDP Renewables is buy-rated for its estimated 13% increase in compound annual growth rate between 2022 and 2027. Goldman Sachs believes the stock is currently underpricing future growth. Enel, on the other hand, is favored for its positive earnings momentum and strong balance sheet due to the disposal of 21 billion euros worth of assets.
Positive Outlook for the Renewable Energy Sector
Goldman Sachs highlighted the significant positives for the renewables sector, including a 70% increase in the price of U.S. power purchase agreements since 2020. The bank believes that after years of declining returns, the renewable industry is now set to experience a reversal in trends and expects a promising future for the sector.
Conclusion: Seizing the Opportunities in European Renewable Energy Stocks
The recent report by Goldman Sachs highlighting European renewable energy stocks with upside potential paints an optimistic picture for the industry's rebound. This analysis, combined with a positive outlook for the renewable energy sector, presents new business opportunities for entrepreneurs looking to capitalize on the growing market.
With the European energy crisis, declining costs of wind and solar energy, and the EU's focus on mitigating climate change, the groundwork has been laid for a resurgence in the renewable energy sector. As identified by Goldman Sachs, several stocks stand out as investment prospects.
German company RWE, with its strong upside potential in renewable energy storage development, captures a significant market share not only in the US and Germany but also across Europe. Danish company Orsted's improved outlook on profits, leverage, and returns signals a new beginning and positions it as an attractive investment option.
Scottish firm SSE, with its strategic investments in new projects, is projected to benefit from higher power prices and thermal generation profits, unlocking further value for investors. Spanish firm EDP Renewables, with its estimated compound annual growth rate, is poised for future growth and offers long-term upside potential. Italian firm Enel, known for its positive earnings momentum and strong balance sheet, is another stock favored by Goldman Sachs.
For new businesses seeking to enter the renewable energy market, partnering with or investing in these established players could provide a solid foundation for success. Additionally, exploring opportunities to fill gaps in the market, such as innovative technology solutions or specialized services, could carve out a niche in this expanding sector.
As the renewable energy sector aims for a rebound and with Goldman Sachs' recommendations shedding light on undervalued stocks, entrepreneurs should keenly consider the implications of this report and seize the opportunities it presents. The shift towards sustainable energy is gaining momentum, and positioning a new business within this sector could lead to significant growth, profitability, and positive environmental impact.
Article First Published at: https://www.cnbc.com/2023/07/26/goldman-sachs-buy-these-highly-compelling-global-energy-stocks.html