These global stocks will soar on an $858 billion electric boom, Goldman says, giving one 45% upside
Demand for power and data centers has been surging, and several companies in Europe are set to benefit, according to Goldman Sachs. Europe’s power demand is expected to rise by as much as 50% in the next 10 years, reversing the slump it has been facing since 2008, the investment bank’s analysts wrote in an April 29 research note. They project that 800 billion euros ($857.5 billion) will be spent on Europe’s power transmission and distribution, thanks in part to “years of under-investment.” “In an industry with elevated operational and financial gearing, such an inflection in revenues (which is also likely to trigger secular organic growth in power grids and renewables) should have a significant effect on corporate profits,” the analysts said. Here are three of Goldman’s buy-rated stocks with over 30% upside potential in the next 12 months. E.on Goldman is bullish on electric utility company E.on and just raised its target price by nearly 3% to 17 euros. That gives the German stock — which is on Goldman’s conviction list — about 35% potential upside. Reasons for the bank’s buy rating on the stock include Germany’s electrification push and retail margins that it says are “likely to be well supported” by falling energy prices. Goldman expects E.on to deliver “middle-single-digit [earnings per share compound annual growth rate] over 2023-28E.” SSE Scottish energy giant SSE is on Goldman’s radar following its recent update confirming “its story of renewed growth.” “The company now details a £20.5 billion [$25.67 billion] capex plan over FY23-27 (run-rate up c.60% versus the November 2021 plan), driven by higher investment in renewables and networks,” the bank’s analysts wrote. “High power prices and thermal generation profits have added to the cashflow the company has to invest,” they said, adding that the company’s growth will pick up as its pipeline is built. Goldman has a target price of 2,024 British pence on the stock, giving it around 42.8% upside potential. Elia Also on Goldman’s list is Belgian transmission systems operator Elia . The company stands out thanks to its “strong earnings growth potential as the fastest growing EU utility facility in our coverage,” the investment bank’s analysts wrote. Goldman has a target price of 135 euros on the stock, giving it 45.5% upside potential. — CNBC’s Michael Bloom contributed to this report.
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