The U.S. is currently experiencing an acceleration in the clean-energy transition due to a significant increase in federal spending. As a result, there is growing optimism surrounding large industrial companies that see this transition as a potential for expansion. One of these companies is Linde (LIN), a producer of specialty chemicals that has made substantial investments in hydrogen projects. Additionally, conglomerates such as Honeywell International (HON) and Caterpillar (CAT) are capitalizing on the increasing demand for sustainable energy. According to Jeff Marks, the director of portfolio analysis at the Investing Club, these companies are taking advantage of secular themes, which represent structural changes in society and the economy, and are not directly tied to traditional business cycles.
Linde is predicted to benefit from the Inflation Reduction Act (IRA), which allocates $369 billion in funding for projects aimed at addressing climate change and accelerating the clean energy transition in the U.S. Furthermore, Linde has entered into an agreement with ExxonMobil for the carbon dioxide off-take from its clean-hydrogen production facility, signifying a commitment to carbon sequestration. The company’s management has also forecasted the potential for $50 billion in global investment decisions related to clean energy over the next decade, including clean hydrogen projects in the U.S.
Caterpillar, a major manufacturer of construction equipment, is also expected to see an increase in demand as a result of the transition to clean energy, as more spending goes into climate initiatives and the construction of new plants and factories to support these projects. The company has also highlighted the opportunities presented by the growth in global energy demand and the transition to clean energy.
Similarly, Honeywell has identified the energy transition as a positive force for the company and outlined its plans for sustainable growth. Its aerospace business is poised to benefit from the development of sustainable aviation fuels, while the company’s collaboration with ExxonMobil reflects its commitment to enabling the capture and storage of carbon dioxide. Additionally, Honeywell is working on new battery technology that can store and discharge electricity for longer periods compared to traditional lithium-ion batteries. CEO Vimal Kapur emphasized the company’s unique position in contributing to the energy transition.
Overall, these industrial companies are well-positioned to capitalize on the clean-energy transition and the influx of federal spending, making them favorable investment opportunities. The shift to renewable energy is seen as one of the major trends driving their growth, along with other themes such as automation and the future of aviation. The positive outlook for these companies has been echoed by analysts and experts, highlighting their potential for long-term growth.