Solar stocks are rising as investors bet on a possible Biden tailwind

Published Mon, Nov 2 202010:15 AM ESTUpdated Mon, Nov 2 202012:24 PM EST

(CNBC PRO is looking at the most important investing angles surrounding the election. For the complete investor's guide, see here .) Solar stocks jumped Monday as former Vice President Joe Biden maintained his lead in the polls, with investors betting that a Democrat in the White House as well as a possible blue wave will lift these stocks further. First Solar , SolarEdge Technologies , Sunrun and SunPower were among the names trading higher, while clean energy-focused exchange-traded funds including the Invesco Solar ETF as well as the Invesco WilderHill Clean Energy ETF also advanced. Cowen noted in a recent research report that there's been a sharp rise in money flowing into renewable energy funds, driven by better economics as costs decline, as well as hopes for more supportive policies from Washington. "We see the increased inflows validating investor interest in the broader exposure to the sustainable energy theme as opposed to picking individual stocks, which likely reflects increased confidence around a political 'Blue Wave,'" the firm said in a note to clients. RBC added that assets under management in funds focused on climate change have nearly doubled this year amid broader investor enthusiasm. "Recently, performance has been trending with Biden's odds in the betting markets — not surprising given Biden's proposals related to green infrastructure, clean energy innovation, and bolstering environmental regulations," the firm said. Biden has outlined a $2 trillion climate proposal that would make the U.S. power sector carbon free by 2035, while pushing the country to net zero emissions by 2050. While the plan is light on specifics, it does outline aggressive targets for greater solar adoption, as well as support for electric vehicles and so-called green hydrogen, among other things. RBC noted that First Solar, SolarEdge Technologies, Itron , Aptiv and Enphase Energy are the most commonly held U.S.-based companies in climate change funds. These stocks also play into the ESG theme, which has also seen record inflows this year. According to data from Morningstar, global assets in sustainable funds hit $1.2 trillion during the third quarter. Ahead of the election, Cowen said it favors SunPower, SolarEdge and First Solar in solar, TPI Composites in wind and Hannon Armstrong in renewable financing. Should Trump be reelected, Cowen's Jeffrey Osborne said, the underlying fundamentals of renewable energy stocks will not change, although the multiple investors are willing to pay for them would likely decline. "We believe multiples today factor in around a 20%-30% premium in anticipation of Biden winning the election," Osborne said. In the same vein as Cowen, research firm Jefferies compiled a list of climate change thematic stocks for a Biden win, which includes Enphase Energy, SunPower, SunRun and First Solar. Electric vehicle plays Tesla , Nikola , BorgWarner and Nio also look attractive, the firm said. Strong earnings have also boosted solar stocks lately. First Solar and SunPower beat analyst expectations when reporting results last week, with the former registering a 70% year-over-year jump in revenue. SolarEdge Technologies will report earnings after the market closes on Monday, while Sunrun will announce results on Thursday. It will be the company's first quarterly update since its acquisition of Vivint Solar, solidifying its leadership in the residential solar space. - CNBC's Michael Bloom contributed reporting.

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(CNBC PRO is looking at the most important investing angles surrounding the election. For the complete investor's guide, see here.)

Solar stocks jumped Monday as former Vice President Joe Biden maintained his lead in the polls, with investors betting that a Democrat in the White House as well as a possible blue wave will lift these stocks further.

First Solar, SolarEdge Technologies, Sunrun and SunPower were among the names trading higher, while clean energy-focused exchange-traded funds including the Invesco Solar ETF as well as the Invesco WilderHill Clean Energy ETF also advanced.