It is hard to get away from the heavy headlines of high inflation and rising energy prices. In Europe, even the strongest economies like Germany are under pressure because of their reliance on Russian gas while countries like Italy, which faces additional problems because of drought during its main growing season this summer, are stockpiling economic problems that will become more visible later this year.
While Norway is not insulated from some inflationary pressures such as food inflation and is facing its own intrinsic problems like high public spending, in the current scenario of high gas and electricity prices it has a unique advantage over other European countries in that it generates all of its energy at home and that 98% of it is from renewable energy sources: hydropower, wind and thermal.
In addition, Norway has always been Europe’s second biggest source of gas after Russia, and now that Russia is using its gas as a bargaining chip, the EU has signed larger short-term and long-term gas supply deals with Norway prompting Norway to increase its gas production.
While real GDP in the EU is expected to increase by 2.7% this year and growth to slow down to 1.5% in 2023, Norway is expected to expand faster, by 3.7% in 2022 (the second-strongest increase in nearly 20 years) and by 2.3% next year.
Three Norwegian stocks worth keeping an eye on
In terms of stock performance, there is one Norwegian company that stands out from the crowd by a significant margin. Shares in Aker Solutions ASA (FRA: 1AKA), an engineering company based in Oslo, have risen nearly 72% since the start of this year and are up 152% on the year. The company has ridden the wave of higher oil and gas prices at the same time as the move to lower carbon. Its technology and systems are used by the oil and gas industry, for instance in subsea drilling, but also offshore wind. At the same time, Aker Solutions has numerous clients using its CO₂ capture technology and storage, an area that will continue to grow over the coming decade even as the oil industry faces resistance over its climate footprint.
Another company of interest is smaller-scale hydropower and wind power developer Cloudberry Clean Energy ASA (FRA: 52K). Its year-to-date share price increase is less impressive than Aker’s, up 15.5% since January, but at a recent capital markets day the company presented a pipeline of new projects which are one step away from planning permits, the last step before construction can start on new projects, and as these permits are obtained the business will expand.
On the other end of the scale from Aker and Cloudberry is the small sustainable salmon farming start up Gigante Salmon AS (FRA: 96M). Shares in the Euronext-traded company are up nearly 39% year-to-date and 36% on twelve months. Against the backdrop of rising food inflation and the climate-related swing away from meat growth, Gigante Salmon has attracted attention as it pays particular attention to sustainability and its effect on marine life. Its two main projects in Norway are progressing to schedule and should have the first batch of salmon smolt – fish large enough to be released into the sea – ready in 2023.
