1 Stock to Make +40% Returns in 5 Years From the Explosive Green Economy

Looking for a key miner with plenty of “green power” upside? Lundin Mining Corp. (TSX:LUN) stock fits the bill.

| More on:
Clean energy

Image source: Getty Images

Investors could see huge returns from the green economy — not just from the switch from hydrocarbon fuels to renewables, but also from alternative protein and other low-carbon market disruptors. From the end of single-use plastics to the rise of the electric vehicle, from floating solar farms to offshore wind parks, there is upside to be gleaned from any market sea change, and the green economy tops them all.

From Starbucks to Microsoft to the Scope 3 group of oil companies, going green is a multi-billion-dollar enterprise with far-ranging implications for the broader economy. The green economy has been estimated at $6.8 trillion worldwide, taking in tech and green infrastructure in addition to energy and the auto sector. With earnings season upon us, a corporate slowdown could see the green economy go mainstream.

2020 is the year of alternatives

If investors seeking growth from market disruption in the 2020s need a single word to define the movement, it should be alternative. From alternative energy to alternative milk (see the Starbucks initiative to cut down on emissions), this year will see a paradigm shift driven by the climate crisis and a slowing global economy hungry for increasing cost efficiencies and underscored by a trend in ethical investment.

Jim Cramer has been vocal on the subject of sustainability, carbon neutrality, and even carbon negativity, and has emphasized the need for companies to push a greener agenda in 2020. What this means for investors is manifold, but the bottom line is that companies need to have a workable carbon-cutting strategy heading into the 20s.

On the flip side, growth investors could see tantalizing opportunities in the green economy. Electric vehicles have captured the imagination south of the border, especially stocks such as Tesla, and their equivalent on the TSX, such as Magna International. For more investors of a more cautious stripe, though, green energy companies offer a mix of defensiveness, dividends, and growth.

This stock could yield high returns by 2025

With the potent combination of a potential annual income growth rate of 30% and a discount of more than 60% compared with its projected cash flows, Lundin Mining (TSX:LUN) could add mountains of upside to a stock portfolio in need of copper exposure. There’s some gold in Lundin Mining’s portfolio, too, plus a moderate (but tasty for its sector) dividend, currently yielding 1.7%.

With projected five-year total returns of 42.8%, stashing Lundin Mining shares to the value of $50,000 could reel in a sturdy $21,400 by 2025. Lundin Mining is a little more volatile than most other Canadian metals and mining stocks, though, so investors following a strategy of low-risk investing may have to keep an eye on this one. Still, with the potential for a sustained run on copper, driven by green economy growth, it’s a diversified buy.

The bottom line

Canadian investors seeking exposure to the booming green economy have a strong power play in Lundin Mining with its access to the high growth potential of copper. With its general bias towards the upside and compounding passive income, it’s a multifaceted play for metals investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Starbucks and Tesla. Tom Gardner owns shares of Starbucks and Tesla. The Motley Fool owns shares of and recommends Microsoft, Starbucks, and Tesla. The Motley Fool recommends Magna Int’l and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft.

More on Dividend Stocks

Redwood trees stretch up to the sunlight.
Dividend Stocks

2 TSX Growth Stocks Set Up for Outsized Gains in 2024

Considering the growth prospects that these two TSX stocks offer, I would keep a very close eye on them as…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Strong Dividend Stocks I’d Add to My Portfolio Right Now

Given their solid underlying businesses, stable cash flows, and high yields, these three dividend stocks are an excellent addition to…

Read more »

ETF chart stocks
Dividend Stocks

Got $500 to Invest in Stocks? Put It in This Index Fund

This ETF is one of the best options for those with a bit of cash, who don't want to worry…

Read more »

warning or alert
Dividend Stocks

Help! How Do I Get Rid of My Stock Duds?

Stock duds can prevent you from making really big returns and using that cash to fund future investments. How do…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Earn $200 a Month Without Lifting a Finger (Invest in Only These Dividend Stocks)

These three monthly paying dividend stocks would be ideal for income-seeking investors.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Want 5% Growth in 2024? It’s Now or Never With a GIC

Locking in a GIC now is the smartest move you can make with interest rates coming down, but consider these…

Read more »

Golden crown on a red velvet background
Dividend Stocks

3 Top Dividend Stocks to Start a Growing Passive Income Stream

Start a growing passive income stream with shares like Canadian Utilities that boast five decades of dividend growth.

Read more »

TFSA and coins
Dividend Stocks

TFSA Investors: Where to Put $7,000 in 2024

These top TSX dividend stocks now offer yields near 8%.

Read more »