These clean energy stocks are set to benefit from an influx of investor cash, Jefferies says

Published Wed, Jun 2 202110:48 AM EDTUpdated Wed, Jun 2 20212:08 PM EDT

Clean-tech stocks have stumbled recently following eye-popping returns in 2020, but the space continues to attract investing dollars and should benefit from growing consumer interest, according to Jefferies. The firm noted that the energy transition theme has seen the biggest growth in assets under management for thematic funds this year. With these companies set to play an increasingly prominent role thanks to factors including supportive policies, Jefferies said it remains one of the firm's preferred investing themes for the remainder of the year. "Governments are reiterating their commitments to net-zero carbon targets, some even bringing forward plans, and we believe COP26 will act as an additional catalyst to the decarbonization trade," the firm wrote in a note to clients. COP26 is a reference to the United Nations Climate Change Conference set for November in Madrid. Jefferies defines the "energy transition" as companies involved in the shift away from fossil-fuel based systems of production and consumption in favor of renewable sources like wind and solar. "The energy transition will continue to increase in importance as investors prioritize environmental, social and governance (ESG) factors," the firm said. During the first quarter ESG-related funds attracted record inflows, boosting total assets in sustainable-focused funds to nearly $2 trillion, according to a recent report from Morningstar . The $1 trillion mark was first topped during the second quarter of 2020, meaning assets nearly doubled in less than a year. Jefferies noted that assets in energy transition funds grew by more than $11 billion between December 2020 and May 2021, making it the most popular category among thematic funds. Water Scarcity and the Circular Economy were the second- and third-most popular themes, attracting about $9 billion and $6 billion, respectively. In terms of exchange-traded funds, Jefferies said assets in energy transition themes grew by $2.8 billion during the same period. Based on data from FactSet, the iShares Global Clean Energy Fund has been one of the most popular renewable energy-focused funds this year, garnering about $2.7 billion in inflows. The First Trust Nasdaq Clean Edge Green Energy Index Fund has been another popular vehicle, attracting about $950 million in inflows. Jefferies compiled its own list of stocks exposed to the energy transition theme, with BYD , National Grid , RWE AG and Iwatani Corp. among the buy-rated names on the firm's list. Other companies on the list include NextEra Energy , General Electric , Enphase Energy and First Solar . In addition to the energy transition, Jefferies said automation and cybersecurity are its top investing themes for the remainder of the year. - CNBC's Michael Bloom contributed reporting.

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The firm noted that the energy transition theme has seen the biggest growth in assets under management for thematic funds this year.

With these companies set to play an increasingly prominent role thanks to factors including supportive policies, Jefferies said it remains one of the firm's preferred investing themes for the remainder of the year.