Yuji Sakai
Citi Research analysts added Ecolab (ECL) and to their Thematic 30 Recommended List for clean water (NASDAQ:AQWA), (FIW) exposure.
Ecolab Inc. (ECL)
This stock recently surpassed its post-Covid high, and its relative performance has stabilized within the broader market.
Analyst Patrick Cunningham upgraded the stock to “buy” at the end of July due to confidence in share gains and margin improvement.
“The Industrial Water business is expected to be the company’s driver for its next leg of growth,” analysts said in a note. “The Water segment is expected to see mid-single digit organic growth while the high-tech portion of this business grows at a healthy double-digit clip.”
IDEX Corp. (IEX)
This stock is trading at almost -20% below its five-year highs due to recent pressure from “choppy” short-cycle industrial trends, and some softness in IDEX’s health and science technologies business.
Analyst Vladimir Bystricky said the company’s EPS revision trends may be near a bottom. Analysts also said the company will continue to generate positive cash flow, “which should bide ‘Green’ investors time to wait for an inflection in EPS in 2025 and 2026.”
In all – “These profitable and cash generative companies are both expected to see an inflection in fundamentals in the years ahead,” Drew Pettit, director of U.S. Equity Strategy at Citi, said in a note. “Both have moderate rate and political risk scores, and attainable implied growth expectations at the time of our last update, fitting our broader market narrative.
Analysts believe green energy stocks are likely to face challenges ahead due to the ongoing business model risks, but there are secular investment trends and a new focus on efficient resource use and infrastructure upgrades that will likely support many names within the “green” universe.
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