A Joe Biden win could mean clean energy stocks stay in the green.
With the 2020 election less than a month away and the former vice president leading President Donald Trump in polls, clean energy stocks are trading like a Democratic victory is imminent, with the Invesco Solar ETF (TAN) up over 131% year to date and hitting highs not seen since 2011 on Tuesday.
The Energy Select Sector SPDR Fund (XLE), which has over 45% of its portfolio in the stocks of Chevron and Exxon Mobil, has fallen more than 50% in 2020.
Clean energy stocks will benefit significantly if Democrats win, Chantico Global CEO Gina Sanchez told CNBC's "Trading Nation" on Tuesday.
"If you look at Biden's plan, he announced in July a very comprehensive $2 trillion spending plan that would focus on ... building a green, clean infrastructure and getting us to an equitable, clean energy future, and that is going to hit every aspect of the economy," she said.
Stocks such as First Solar and Sunrun, which are holdings of TAN and the Invesco Wilderhill Clean Energy ETF (PBW), could benefit from not only direct government spending, but other incentive plans to get individuals and businesses more involved in the shift to clean energy sources, Sanchez said.
"Even though there's a lot of talk that these names are in a bubble, that this whole clean energy space has been on a run, $2 trillion is a tremendous amount of very real demand that will benefit these names" and others including Lithium Americas, another holding in PBW, she said. "There's a broad way to play this."
On the other hand, a Trump victory could hurt these stocks, Sanchez said, citing the U.S. Department of Labor's recent pushback on ESG via a reminder to corporate pension providers that it's unlawful to  sacrifice performance in order to promote environmental, social and corporate governance.
"It would be quite negative for some of these names that have actually received a lot of positive forward expectations into their [price-to-earnings multiples]," she said. "You could see some air being let out of that bubble."
JC O'Hara, chief market technician at MKM Partners, said there's more to clean energy's prospects than just the presidential election.
"We're always cautious to build a portfolio based off of what potential candidate may win the election and what policies may go into effect," he said in the same "Trading Nation" interview. "But we like to stick with existing trends, and ... clean energy is a huge one and we think it's a theme that's accelerating and has plenty of room to run."
O'Hara pointed to the "huge discrepancy" in performance between "green" plays and traditional oil and gas stocks: While the XLE is down almost 47% in the last year, the iShares Global Clean Energy ETF (ICLN) is up nearly 82%.
Moreover, individual pockets of the clean energy space are outperforming in their own rights, he said. This year, TAN is up triple digits, First Trust's wind energy ETF is up nearly 25% and an ETF from VanEck tracking low-carbon stocks is up almost 54%.
"I think this clean energy theme is here to stay," O'Hara said. "Finally, I think it's important that clean energy is a theme, but that clean energy theme fits nicely into an even larger theme, and that's ESG. Companies that have positive environmental, social and governance characteristics ... have been huge beneficiaries of a lot of passive income, so, we don't see that theme ending anytime soon, either."
TAN closed up over 1% on Tuesday. The XLE fell about 1.5%.
