UBS strategists said renewables appeared to be at the start of a sustainable rally after years of downgrades.
Strong performances were cited from Solaria, Siemens Energy and Acciona, while Orsted has lagged.
Top buy-rated names from the Swiss bank are EDP and RWE.
"After four years of plumbing new lows, some renewables stocks are rebounding for what we think is a sustainable rally," strategists said in a note.
"They have been considered 'cheap' and 'unloved' many times in recent years when they continued to experience cost pressures, management issues and higher funding costs/discount rates curtailing asset turnover - earnings revisions were pretty consistently negative.
"That has now changed with steady upgrades all year."
The electrification theme has gained 23% year-to-date on the back of 10% earnings upgrades. UBS said enthusiasm is justified, with the sector not yet expensive or crowded.
Favoured names include SPIE, Siemens and Prysmian, with Schneider Electric also highlighted as undervalued after recent derating.
Looking wider, a renewed stagflationary trend in bond markets was noted, sparking higher volatility in global equity markets.
UBS advised reduced exposure to cyclicals and increased focus on stock selection.
This year has seen the biggest global policy shifts in decades, including tariffs, NATO spending, fiscal and tax measures, deregulation and immigration changes.
While markets have moved, the economic outcomes are only just beginning to emerge, said UBS.
"As we enter September and the fourth quarter, we expect to start seeing the economic and fundamental outcomes of these policies."
EU equities are “insulated but not immune,” UBS said, maintaining a year-end target of 550 for the Stoxx Europe 600, implying flat price returns, but sees strong opportunities within sectors.