Knowing which stocks to sell before a major election can be the difference between making a short-term profit or facing a long-term loss. Moreover, no other sector is as subject to the whim of presidential policy as the energy sector. Thus, with this year’s presidential election leaning in favor of former President Donald Trump, there are certainly some energy stocks to sell, particularly in the clean energy sector.
The reason for this stems from Trump’s general tendency to improve market conditions for cheap sources of energy like oil and natural gas. His policies favor these industries due to their relatively generous impact on the average consumer. Cheap energy tends to tame inflation, and most Americans rely on gasoline for their cars and natural gas for their homes.
Thus, investors may want to consider getting out now from overly optimistic positions relying on government policies to keep the clean energy sector lucrative. Bearing this in mind, here are three energy stocks to sell before November’s election.
First Solar (FSLR)
Between newly announced tariffs on Chinese solar products and the relative indifference Trump exhibited during his first term, First Solar (NYSE:FSLR) may not be as lucrative as once predicted. Should Trump succeed in winning the presidency this November, many of his policies and tariffs could stand in the way of the continuous growth needed to keep its stock price rising.
Currently, the stock continues to stay stable at its new range between $220 and $240, representing a 20% increase over the last 12 months. Thus, investors who bought in more than a year ago may want to consider taking profits before an election-induced dip. That’s because energy is heavily government subsidized. And its profitability tends to rely on tax incentives or outright funding.
It’s likely Trump’s policies won’t focus on supporting solar, thus making the situation more difficult for FSLR stock.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) has repeatedly claimed it’s not worried about another Trump presidency. But its investors may want to consider how a Republican administration would impact the green energy giant. While NEE was a major donor to Trump and its Chief Executive Officer has come out publicly to state he believes Trump won’t repeal the critical Inflation Reduction Act (IRA), anything is possible.
Furthermore, while the IRA provides funding to clean energy companies like NEE, such companies may not remain competitive in an energy industry where oil and gas become even cheaper. This comes as even NEE’s Chief Financial Officer Rebecca Kujawa admits the company has had to cancel a few of its backlogged projects due to higher-than-expected interconnection costs.
Should this trend continue into 2025 and 2026 under a potential Trump presidency, NEE stock could take a serious hit, nullifying the 20% gains it has made so far in 2024.
iShares Clean Energy ETF (ICLN)
With the broader trend of Trump’s policies dissuading clean energy investment, exchange-traded funds fully invested in the industry might struggle come November. One such ETF is the iShares Global Clean Energy ETF (NASDAQ:ICLN). It has struggled with and without Republican administrations. Yet, should the Republicans take the House, Senate and Presidency this fall, drastic policy changes could spell further losses for ICLN.
In fact, oil and gas are at the forefront of most Republican agendas. The vast majority of Americans have overall dependence on gasoline for transportation. Thus, the companies that make up the ICLN ETF are not likely to flourish for the next four years.
As a result, the ICLN ETF is hamstrung regarding the recovery trajectory it needs to achieve to be a worthwhile investing vehicle. Investors who are considering the ETF may want to avoid it and seek an oil and gas alternative in the event of a Trump presidency.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
