I was recently in New Zealand, which offered an insight into how a global transition to green energy can work; the Kiwis believe in a clean and green environment, blending energy policies with economic growth, observes Adam Mayers; in his Adam Mayers Investing, the advisor highlights a trio of favorite green ideas.
Brookfield Renewable Partners (BEP) is one of the world’s largest publicly traded renewable power generating companies, with operations in 30 countries. Its energy is generated by a combination of hydro (74%), wind (21%), and solar (5%).
Brookfield operates 19,000 megawatts of generating capacity, which is the equivalent to removing six million vehicles from the road, or planting 450 million trees, the company says. It has 8,000 megawatts under development.
Brookfield had a stellar 2019 and the momentum continued up to the market collapse, fueled by strong operating results and good prospects. Brookfield raised its quarterly distribution in January by 5%. The new annual distribution is $2.17 per share and yields 4.43%.
The partnership is creating a new company with publicly traded shares that are equivalent to the existing units. Unitholders will receive one new share for every four units they hold.
ABB Group (ABB) is an engineering and technology pioneer with 2019 revenues of $28 billion. The company has a strong presence in electric vehicle charging stations, automated factories, and industrial robots.
Last year was one of transition. ABB sold its power grid division to Hitachi at the end of 2018 in a deal which should close this spring. It also tightened its focus and aggressively cut costs. Like many European companies, ABB pays one dividend a year, based on profitability. The current $0.77 payment yields 2.46% and appears safe.
ABB is well positioned to gain from the transition to renewable energy. It manufactures the gas station of the future — the bays, plugs, and software that run electric charging stations. It is a leader in clean, automated factories.
As a global company, it is affected by global disruptions. CEO Peter Voser said in an earnings call last month that Chinese generate 15% of its sales. Operations have been curtailed with the impact as yet unknown.
My newest green energy recommendation is Canadian Solar Inc. (CSIQ). Canadian Solar is based in Guelph, Ontario and is one of the world’s largest manufacturers of solar panels. It sells the panels as part of turnkey solar power plants.
The company was founded in 2001 and has been public since 2006. It employs 13,000 people in 24 countries. Most of its manufacturing facilities are in Canada and China, including two plants in Ontario. It has delivered over 38 GW of solar capacity and has 10 GW of projects in its pipeline.
Canadian’s Solar’s trailing 12-month revenues are $3.2 billion, and its net income is $214 million. In its latest nine months, gross margin improved. It held $1.04 billion worth of cash and cash equivalents, up from $981 million in the previous quarter.
It has plenty of projects in its pipeline. Despite a strong financial performance, the trailing 12-month p/e ratio is at 4.75. That offers a lot of upside for patient investors.