European utilities and clean energy had an underwhelming performance in 2024, but Bernstein sees bright spots within the sector to play in the year ahead. "We have a bias towards companies loading up on the visible capex [capital expenditure] cycle in electricity networks," the investment bank's analysts wrote in a Dec. 9 note. Here are two of Bernstein's top stock picks in the theme. EDP Renováveis Bernstein is bullish on Spanish renewable energy player EDP Renováveis and has a target price of 14.30 euros ($15) on the stock, giving it about 48% upside potential from Thursday levels. The "share price has overreacted to the U.S. energy policy risks, offering a great opportunity to get exposure to the company," the bank's analysts highlighted. The energy sector has come into the spotlight, with U.S. President-elect Donald Trump expressing a desire to reduce domestic energy costs. Going forward, the analysts expect the U.S. to remain a key market for EDPR and to offer "attractive growth opportunities in onshore wind and solar." Shares in EDPR are listed on the Portuguese Euronext Lisbon and trade as an American Depositary Receipt in the U.S under the EDRVY ticker. SSE Bernstein is also betting on energy company SSE , which it says sits "on a number of scarce but low cost renewable growth options and is happy to patiently wait for the right opportunities." A key plus for the company is that its "balance sheet is in a strong position to support the growth," Bernstein analysts noted. The firm's other merits include offering "the best of both worlds with networks enjoying explosive growth driven by significant investment needs and improving regulatory outlook in U.K. electricity transmission and renewables earnings benefiting from capacity expansion in U.K./ Irish onshore and offshore wind projects," they added. Shares of SSE are listed on the London Stock Exchange and also trade as an ADR in the U.S. under the ticker SSEZY . Bernstein gave the stock a price target of 1,720 pence ($21.80), or about 8% upside potential compared with its Thursday levels. Stocks in the U.K. trade in pence. — CNBC's Michael Bloom contributed to this report.
