Senate Democrats are working hard to pass a new budget before Congress’ nearly month-long recess which begins on Aug. 6. The senators have made significant progress on the legislation. Since the budget will probably include provisions to spur greater adoption of clean energy and electric vehicles (EVs), the best stocks to buy that could surge as an outcome of this legislation are names within those two sectors.

According to The Hill, the Supreme Court’s recent ruling curbing the ability of government agencies to fight climate change has increased the pressure on Senate Democrats to pass a budget deal that promotes the use of clean energy and EVs. Meanwhile, the senators have reportedly reached a deal on reforms that will lower prescription drug costs, increasing the chances that some sort of budget will pass. Given the fact that many of the Democrats’ most ardent supporters are very concerned about climate change, any such legislation will probably include new tax breaks for clean-energy producers.

To take part in this likely development, here are seven good stocks to buy:

Stocks to Buy: SunPower (SPWR)

This company sells solar panels and electricity-storage solutions to consumers. In light of its robust U.S. business, SunPower (NASDAQ:SPWR) should benefit a great deal from the extension of and increases in solar tax breaks that are likely to be included in the Democrats’ budget.

Moreover, President Joe Biden’s recent decision to waive any new tariffs on solar panels from several Southeast Asian countries should also reduce investors’ worries about new tariffs lowering SunPower’s profits and margins.

Meanwhile, rising electricity prices in general and higher natural gas prices in particular, along with the rapidly increasing adoption of EVs, should spur a tremendous acceleration in the adoption of solar by households in the U.S. and Europe.

Also likely to help SPWR stock over the long term is Europe’s recent “revolutionary” decision to mandate solar panels on “new residential buildings in 2029.”

JinkoSolar (JKS)

As one of the world’s largest makers of solar panels with significant businesses in the U.S. and Europe, JinkoSolar (NYSE:JKS) is very well-positioned to benefit from all of the trends that are likely to help SunPower, including new U.S. solar tax breaks.

But JinkoSolar is also likely to be greatly boosted by numerous other developments, including an expected doubling of solar panel installations in China this year, the E.U.’s decision to “mandate […] solar rooftops on all public and commercial buildings by 2027,” and the extensive growth of solar energy in the Middle East, where the company also has a significant presence.

JinkoSolar continues to make impressive deals around the world. Recently, the firm agreed to provide Brazil’s biggest “distributor of solar energy solutions” with 600 megawatts of solar panels. Additionally, in May it, “signed its first European Energy Storage Solution.”

Despite the struggles of the U.S. stock market, JKS stock has surged over 50% so far this year and 13.7% in the last month.

Stocks to Buy: The Invesco Solar ETF (TAN)

The Invesco Solar ETF (NYSEARCA:TAN), a solar exchange-traded fund (ETF), holds many stocks that would benefit a great deal from stepped-up tax breaks for solar projects in the U.S.

For example, its top two holdings — Enphase Energy (NASDAQ:ENPH) and SolarEdge (NASDAQ:SEDG) — sell many inverters used in U.S. solar projects. The ETF’s third-largest holding — Sunrun (NASDAQ:RUN)– focuses on selling solar panels to American households, while its fifth-largest asset — First Solar (NASDAQ:FSLR) — provides solar panels to many American electric utilities. Finally, the solar ETF’s seventh-largest holding — Shoals Technologies (NASDAQ:SHLS) — provides a variety of equipment used in American solar projects.

Other stocks held by the ETF should get a big lift from the expansion of solar energy in the U.S. and China. Among the names in that category are Chinese panel maker GCL Technology, TAN’s third-largest stock, “solar glass” maker Xinyi Solar, the ETF’s fourth-largest holding, and Chinese polysilicon maker Daqo New Energy (NYSE:DQ), its sixth-largest asset.

Showing strong momentum, TAN stock climbed 20% from Feb. 22 to Jul. 1.

Global X Lithium & Battery ETF (LIT)

New EV tax breaks, which are likely to be included in the Democrats’ budget bill, should give the U.S. EV market a big lift. The latter development would be very bullish for the Global X Lithium & Battery ETF (NYSEARCA:LIT).

The sales of all-electric vehicles jumped 60% year-over-year in the U.S. in the first quarter to nearly 160,000. So, any significant additional accelerations would meaningfully improve the financial results of many lithium and battery makers.

The ETF’s top holding is U.S. lithium producer Albemarle (NYSE:ALB), whose operating income soared 280% to $323 million in the first quarter versus the same period a year earlier. Its third-largest holding is the world’s largest EV battery maker, Contemporary Amperex Technology, whose sales soared 159% in 2021 to roughly $20 billion. Meanwhile, its net profit soared 185% to $2.45 billion. Finally, its fourth-largest stock is EVE Energy, whose sales more than doubled to $16.9 billion in 2021, while its operating income jumped to $3.1 billion from $1.93 billion in 2020.

LIT stock jumped 16% between Apr. 26 and Jul. 1.

Stocks to Buy: Plug Power (PLUG)

On Plug Power’s (NASDAQ:PLUG) first-quarter earnings conference call, held on May 9, its Chief Executive Officer (CEO) Andy Marsh, said:

“I can tell you one of those senators who has been getting a lot of press time is very, very bullish on, making sure that part of the climate bill includes substantial extension of the ITC, for fuel cells and hydrogen as well as the production tax credit.”

It sounds like Marsh is referring to Democratic Senator Joe Manchin. He has been withholding his support for a Democratic budget bill and can provide the crucial 50th vote that would enable the legislation to pass in Congress. As a result, the other senate Democrats have been eager to include items in the budget that he supports and adding tax breaks for hydrogen producers to the bill could be one way of accomplishing that goal.

Meanwhile, as I have pointed out in past columns, as a leading producer of green hydrogen, Plug Power is very well-positioned to benefit from rapidly increasing use of the fuel and many large nations’ support for it. Finally, Plug says that its profit margins are poised to significantly rebound in the coming quarters and years, while it has developed many partnerships with major companies around the world.

Darling (DAR)

I would not be surprised if the Democratic budget included a provision giving airlines tax breaks for using biofuels and sustainable fuels. That’s because airlines are looking “to develop sustainable aviation fuel alternatives for both future models and aircraft already flying today,” as Investor’s Business Daily explained in March. This would be great news for Darling Ingredients (NYSE:DAR)

Sustainable aviation fuel (SAF) is “now at a tipping point” and is the best way for airlines to reduce their carbon footprints over the next two decades. This is according to Sean Newsum, the director of environmental strategy at Boeing’s commercial airplanes division.

Darling specializes in transforming “food waste” and “edible by-products,” including waste, fats and grease, into usable components. In December, Darling acquired Valley Proteins in an effort to obtain more raw materials that it can use to create SAF.

According to Flying, Darling’s joint venture with Valero (NYSE:VLO), which produces renewable diesel, could give Darling the knowledge it needs to produce effective SAF.

The forward price-earnings ratio of DAR stock is a very low 12.6, as its earnings per share is expected to jump to $5.43 in 2022, up from $3.90 in 2021.

Stocks to Buy: General Motors (GM)

With the highly successful launches of its Hummer and Cadillac Lyriq EVs, GM has become a force to be reckoned with in the sector. Indeed, Mary Barra, the CEO of General Motors, predicts that GM would sell more EVs than Tesla by 2025.

On Jun. 21, GM delivered 150 of its BrightDrop EV delivery vans to FedEx (NYSE:FDX). Additionally, last month, the automaker’s Cruise unit became the first entity to offer paid, autonomous rides in California.

What’s more, since GM’s EVs are no longer eligible for the federal tax credit and the Democrats’ budget is likely to enable all EVs to be eligible for the tax credit, GM is one of the best stocks to buy in anticipation of the legislation.

Even though it will launch many EVs in the coming years and its robotaxi business is likely to take off tremendously, GM stock still has a forward price-to-earnings ratio of just 5.

On the date of publication, Larry Ramer was long JKS stock, DAR stock, and PLUG stock.