The renewables industry faces an uncertain future, but UBS sees promise in the sector in the year ahead, naming two global stocks with over 55% upside on its watch. The sector came into the spotlight after U.S. President-elect Donald Trump vowed to curtail renewable energy subsidies. “Regarding the U.S. (the single most important market for many European utilities), we think that the concerns are overdone,” analysts at the Swiss investment bank outlined in a Dec. 18 note. Drawing reference to the performance of renewables in Trump’s last term, they noted that growth in the sector is “likely to continue … driven by state and corporate emission goals.” Renewable stocks have underperformed between 2021 and 2024 largely due to higher government rates in the U.K. and U.S., as well as balance sheet concerns, the analysts noted. “The sector became crowded with capital from not only utilities, but also oil and gas companies and financial investors seeking attractive ROIC-WACC [return on invested capital-cost of capital] spreads,” they added. The ROIC-WACC spread measures the difference between the real rate of return on an investment and the prevailing inflation rate in a country. Looking ahead to 2025, the analysts see several positives, including more discipline across the industry and an easing in supply chains. They also flagged other benefits such as the possibility of a rise in returns for new projects on a multi-year basis and a fall in bond yields. Against this backdrop, the analysts noted that European stocks appear “unrealistically cheap.” Stocks to watch Stocks on UBS’ radar include renewable developers Orsted and RWE given their “growth exposure and more limited exposure to power prices.” Shares in Orsted are listed on Denmark’s Nasdaq Copenhagen and trade as American Depositary Receipts (ADRs) in the U.S. under the ticker DNNGY . UBS has a buy rating and price target of 520 Danish krone ($72.5) on the stock, giving it around 60.4% upside from its Dec. 31 price. The Swiss bank also has a buy rating on RWE at a target price of 45 euros ($47), which implies around 56.1% upside. Shares in the German energy giant are listed on the Frankfurt Stock Exchange and trade as an ADR under the ticker RWEOY .