Trump’s election sparked a sell-off in clean energy stocks. But is this an opportunity for these 2 industry leaders?

The election of Donald Trump on November 5 has already caused investors to anticipate which stocks might gain or lose over the next four years.

One of the immediate casualties was clean energy stocks. With a Trump White House and a likely Republican House and Senate, investors fear a repeal of clean energy incentives put in place by the Biden administration’s Inflation Reduction Act (IRA).

Add to that concerns that Trump’s policy of cutting tariffs and taxes could fuel more inflation, and it could pose a perfect storm for clean energy stocks, which were already suffering from the environment of high interest rates in recent years.

However, the current selloff may also present an opportunity for some clean energy stocks. It’s time for investors to take a serious look at these two high-quality industry leaders who have been thrown out with the bathwater.

Why Clean Energy Stocks Might Not Fare So Badly in the Trump Era

There are two reasons why clean energy stocks might not pose as much risk as the new Trump administration thought.

First, even though Republicans have taken over Congress, many of the clean energy projects that are starting to move forward are actually in red districts. About 75 percent of IRA spending and job creation went to red states or red counties in blue states.

While this fact certainly didn’t help Vice President Kamala Harris win the election, it could prevent the complete repeal of these incentives. In fact, 18 Republican lawmakers just sent a letter to House Speaker Mike Johnson warning against a complete repeal of the IRA, given the benefits they’re seeing in their districts. Although Republicans will likely gain a majority in the House, the margin will likely be much less than 18 votes.

The second factor is Tesla CEO Elon Musk is a big supporter and donor of Trump. Musk is obviously a proponent of clean energy and will likely have some influence over the new administration’s handling of IRA incentives.

So while there might be some policy pushback, a complete repeal of the IRA and its incentives seems unlikely.

Rivien

Rivien (RIVN -2.42%)like many electric vehicle (EV) titles, sold after the elections. Yet the stock has all but recovered those losses following a generally positive update to the company’s outlook following its recent third-quarter earnings release.

Rivian is somewhat of a startup, so it’s still losing money. However, its high-end SUVs and the electric delivery trucks it makes Amazon have given the company two great niches in which it is currently successful.

Rivian’s top-of-the-line R1 SUV costs more than $70,000, so its wealthier end customers may be less sensitive to high interest rates or the administration’s possible reduction in EV incentives Trump.

Additionally, the company just signed a high-profile deal with Volkswagen (VWAGY 1.11%) in which Rivian will license its cutting-edge software and hardware technology to a joint venture and receive in return up to $5.8 billion through 2027, which will help fund the company’s launch of its R2 SUVs in 2026 to the first half of 2026.

Rivian has also made progress in reducing raw material costs and capital expenditures and is even forecasting a positive gross margin in the fourth quarter. This is due to the fact that several old supplier contracts were implemented when the new second generation R1 platform was implemented, which has a much lower cost structure.

While Rivian certainly still has a ways to go to achieve overall profitability, achieving a positive gross margin is a huge improvement over the negative 40% gross margin seen over the past year. In addition, the agreement with Volkswagen constitutes an important source of financing while uncertainties around interest rates remain.

Overall, Rivian appears to have the high-profile partnerships, funding sources, and margin improvements that EV brands will need to survive and compete in the new environment.

Enphase

Like other solar companies, Enphase (ENPH -6.36%) saw its shares decimated following the elections. However, the stock has been struggling since interest rates soared in 2022, significantly reducing demand for rooftop solar.

Still, Enphase is a profitable industry leader. Its microinverter technology applies to each panel in a system and is a superior choice to string inverters, which only convert energy from all panels at the same time. The advantage of microinverters is that they increase the efficiency of the entire system, while string inverters are limited by the least efficient panel in a solar installation.

Microinverters therefore command a higher price than string inverters. This has allowed Enphase to remain profitable even in an absolutely horrible rooftop solar environment over the past two years. Simply compare Enphase’s results to its string inverter rival Solar edge:

ENPH Revenue (TTM) data by YCharts.

Enphase has taken even more proactive steps to preserve profitability, recently laying off some 500 employees. While this is unfortunate for these employees, it shows that management is proactive in reducing costs and maintaining management’s margin goals, even though Enphase is still profitable at this time.

Additionally, even though revenues declined sharply year over year, revenues and operating margins improved sequentially in each of the last two quarters, as you can see in the panels top left and bottom right.

So even though the market is still in a significant down cycle, Enphase’s results show that it could be at its lowest. And with its profitability better than all of its competitors, it has the potential to outlast those that might go bankrupt, putting Enphase in a position to capitalize on the next upcycle.

With Enphase’s stock now down to just 18.5 times next year’s earnings estimates and the stock price back to levels not seen since 2020, the time may be time for contrarian investors to focus on this solar energy leader.