'Green' stocks are getting hit this year, but this strategist still backs his favorites

The wind energy park "Odervorland" in the district of Oder-Spree in Brandenburg, Germany.
Patrick Pleul | picture alliance | Getty Images

Stocks tied to the "green transformation" theme are taking a hit so far this year, but one equity strategist is backing a number of them for the long-term.

It comes after a bumper rise for green energy stocks in 2020, as oil and gas companies suffered at the hands of plunging demand due to the pandemic. But the roles have reversed so far this year.

"Our guess is that investors are beginning to calibrate their views on the green transformation and asking whether they are paying too much for future growth," Saxo Bank Head of Equity Strategy Peter Garnry said in a note to investors earlier this month.

At the time, Saxo Bank's "green transformation" basket of 40 stocks — which includes high-profile names such as Tesla — was down 9.1% so far in 2021, making it the worst performer among the Danish investment bank's equity themes.

The broad move lower has continued, with the majority of green stocks falling last week as global markets experienced another wobble on inflation fears.

Despite this, Garnry remains bullish on the sector for a number of key reasons.