By Avi Salzman

It's no secret that Donald Trump doesn't like solar and wind energy. That's no reason for investors to shun their stocks.

Renewables were conspicuously absent from the "energy emergency" executive order the president signed on his first day in office, even though they are the fastest-growing sources of electricity -- and in several parts of the country, the cheapest.

Trump's rhetoric and early actions have impacted clean-energy projects around the country, and some companies have already pulled out of them. He issued a 90-day pause on federal permits, and paused loans and grants that had already been issued by the Biden administration, upending existing projects. A judge has stopped that order from taking hold for now, though the spending pause may come back.

But this past week also brought some hopeful signs in the renewables space -- and proof that companies and investors are still betting on the industry. French energy giant TotalEnergies, which has been getting choosier about where it invests in clean energy, says the U.S. is still an attractive market and it plans to continue investing in renewables here, while renewable-energy CEOs have spoken optimistically about future demand for their products. That suggests there may be life in the group yet.

"This temporary lull will pass," says Shawn Kravetz, president and chief investment officer of investment firm Esplanade Capital.

Take Enphase Energy, which makes the technology that controls solar panels on people's homes. The company beat analysts' earnings expectations and said that its U.S. revenue rose 6%, a sign of stabilization after more than a year of weak sales. In an interview, CEO Badri Kothandaraman said that he doesn't expect Trump and the Republican Congress to completely do away with support for solar, particularly given that Elon Musk has spoken positively about it. What's more, Enphase is producing a sizable share of its products in the U.S. now and doesn't intend to slow down. "We are doubling down on U.S. manufacturing, " he says.

There was even optimism about wind power, which is even more threatened by Trump, whose distaste for wind has been well-documented. Offshore wind is in particular trouble. Shell just decided to pull out of a major East Coast wind project, and New Jersey canceled a solicitation for offshore wind power. Onshore wind installations, however, are on track to increase 31% this year, according to Bloomberg NEF. "There's much less reliance on federal environmental permits and federal leases for U.S. onshore wind," said Derrick Flakoll, a policy analyst at Bloomberg NEF.

Vestas Wind Systems, the world's largest maker of wind turbines, said this past week that it ended 2024 with a record order book. And while the company isn't optimistic about the U.S. offshore business, which has dried up, onshore looks much more promising. "When it comes to the onshore backlog, we are well covered for 2025," CEO Henrik Andersen. "We are well covered a long distance into 2026."

While Vestas stock dropped 54% last year, some analysts think there's considerable upside ahead. Citigroup's Martin Wilkie estimates that Vestas will deliver 39% more wind power in 2025 than in 2024. He thinks the stock, which trades in Europe, can roughly double from a recent 106 Danish kroner ($14.66).

Another potential winner is First Solar, the largest American manufacturer of solar panels. The stock has dropped 22% since Trump was elected, and now trades at just eight times its expected 2025 earnings. First Solar would tumble if the Inflation Reduction Act goes away, but few analysts expect a full repeal. Jefferies analyst Julien Dumoulin-Smith calls it "the go-to domestic module supplier in the U.S." and thinks shares could rise to $248 from a recent $167, a nearly 50% gain.

Trump is no friend to renewable energy. It doesn't mean some stocks can't thrive anyway.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 07, 2025 12:40 ET (17:40 GMT)

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