Stock Picks for Companies to Benefit from IRAs: BofA
President Joe Biden signs the Inflation Reduction Act of 2022 at the White House on August 16, 2022.
Mandel Ngan | Afp | Getty Images
President Biden signed the Inflation Reduction Act into law on August 16, 2022. In the nearly one year since the passage of the historic climate bill, 270 new clean energy projects have been announced with investments totaling $130 billion, according to Bank of America estimates.
Clean technology companies and their suppliers will be the big winners as the energy infrastructure transitions from fossil fuel dependence to decarbonized energy sources, the note said.
related investing news
This list only includes stocks that BofA has rated as a “buy” and that have a climate link. (The IRA also included some prescription drug reforms, but stocks related to those provisions are excluded here.) Some stocks cross multiple sectors, so are listed more than once.
Renewable energy sources
The Inflation Reduction Act provides production and investment tax credits for power generation and capital investment in renewable energy projects. These companies manufacture parts used in the construction of renewable energy sources, such as wind blades or semiconductors used in solar panels, or engage in businesses related to the operation and management of these renewable energy systems.
KERN COUNTY, CA – MARCH 23: LADWPs Pine Tree Wind and Solar Farm in the Tehachapi Mountains, Tuesday, March 23, 2021 in Kern County, California. (Irfan Khan/Los Angeles Times via Getty Images)
Irfan Khan | Los Angeles Times | Getty Images
Accumulators and energy accumulators
Improvements to the electrical grid
The IRA includes $5 billion in loans to build and improve the power grid infrastructure needed to further the deployment of clean energy. These companies are either utility grid operators or make software or parts to run the electric grid.
Transmission towers are seen at the CenterPoint Energy power plant on July 11, 2022 in Houston, Texas. ERCOT (Electric Reliability Council of Texas) is urging Texans to voluntarily conserve electricity today due to extreme heat that could lead to power outages.
Brandon Bell | Getty Images
Clean fuel and biofuel
Carbon capture
Clean vehicles
The IRA includes tax credits for electric vehicles and provisions aimed at increasing the production of the batteries that go into electric vehicles and the raw materials that go into those batteries. These companies produce electric vehicles or components for these electric vehicles and their charging infrastructure.
Ford CEO Jim Farley strokes a Ford F-150 Lightning truck before announcing at a news conference that Ford Motor Company will partner with the world’s largest battery company, China’s Contemporary Amperex Technology, to build an electric vehicle battery plant in Marshall, Michigan on February 13, 2023 in Romulus, Michigan.
Bill Pulliano | Getty Images News | Getty Images
Materials, metals and mining
Electric vehicles and renewable energy sources need specific raw materials. The IRA contains provisions that support the production of both electric vehicles and renewable energy sources, as well as steel used in wind and solar power generation.
Livent Corp.: Company of chemical materials
Materials of MP: Metallurgical and mining company
Nucor Corp.: Metallurgical and mining company
Sigma Lithium: Metallurgical and mining company
Industrial companies with solutions to improve construction efficiency
The IRA includes provisions to improve the energy efficiency of residential and commercial buildings, and these companies provide energy-efficient equipment or technology to improve the performance of these energy-efficient systems.
New York skyline.
Images of SOPA | Getty Images
Agriculture and forestry
The IRA includes $19.5 billion for agricultural conservation programs, $5 billion for forest management and restoration, and funds designed to support underserved farmers and landowners. These companies have programs aimed at helping farmers sequester carbon in the soil or in forest management techniques.
Nutrien Ltd: Chemical company
Weyehaeuser: Real estate company
