CNBC Pro

Electric grid spending is an ‘overlooked’ opportunity, says Morgan Stanley. Here are the names to buy

A worker wearing a protective mask assembles truck transmissions at the Eaton Corp. manufacturing facility in San Luis Potosi, Mexico, on Wednesday, May 27, 2020.
Mauricio Palos | Bloomberg | Getty Images

The proliferation of renewables and the rising use of electric cars will demand further investment in the electric grid –  and could create a potential tailwind for several industrial companies, said Morgan Stanley.

The firm estimates that the electrical grids in the U.S. and Europe will need an additional infusion of more than $500 billion through 2040, making it an "overlooked" investment opportunity.

"The roll-out of renewables + increase of EV adoption is now in full swing. But the success of this Green Transition risks being undermined by current spending plans on the Electrical Grid coming up short," the firm wrote in a recent note to clients.

More In Street Calls

Here are Friday's biggest analyst calls: Apple, Tesla, Coinbase, Domino's, Costco, Meta & more
CNBC ProHere are Friday's biggest analyst calls: Apple, Tesla, Coinbase, Domino's, Costco, Meta & more
Wedbush upgrades fuboTV to outperform citing 'compelling entry point' after stock pullback
CNBC ProWedbush upgrades fuboTV to outperform citing 'compelling entry point' after stock pullback
Goldman cuts year-end S&P 500 target to 3,600, sees it falling even further in 'hard landing'
CNBC ProGoldman cuts year-end S&P 500 target to 3,600, sees it falling even further in 'hard landing'