It is certain that there is a move to push the Canadian and world economies towards greener technology. These relatively new green companies are poised for the biggest growth in the energy sector. While oil, coal, and natural gas currently dominate the world energy markets, green technologies and companies are advancing in leaps and bounds
With technological advances made over the last decade, the cost of generating electricity using solar power is now around half the cost of using fossil fuels. Canadian Solar (NASDAQ:CSIQ) is on the move with acquisitions and new projects in Asia and South America. With projects currently underway to increase Canadian Solar’s generating capacity by almost 10%, the company is a world leader in solar power generation. Its increased business dealing in South-East Asia has it well positioned to expand into China, the world’s largest economy, as that country continues to move to green energy sources.
Net income for 2018 was up 130% when compared to 2017, and reports from 2019 indicate continued growth in sales. Shares are currently priced at US$21.80, and 12-month forecasts predict a price range of US$20-$32. This could potentially provide a 49% increase over today’s closing price. With a P/E ratio of just over six this is a company well worth investigating.
Not to be outdone by anyone, Calgary-based Transalta Renewables (TSX:RNW) brings over 100 years of experience to the renewable energy market. As a division of Transalta, it is still able to call on the resources of the parent company while devoting attention to its own projects. Reasonably priced at close to $18 per share, this price represents a 50% increase from 12 months ago. The P/E ratio is high at roughly 21; however, the dividend yield this year was just over 5%, which provides a good return on investment. As energy demands continue to increase, Transalta Renewables is investing in new wind power-generating projects including the Big Level project in Pennsylvania, which started commercial generation on Christmas Eve 2019.
With the government of Canada imposing carbon pricing in 2019, Transalta Renewables can expect consumers to push for more renewable energy production. This increase in demand can only mean good things for the company’s bottom line.
Xebec Adsorption (TSXV:XBC) designs, purifies, and transforms gases into clean sources of energy. It works not only with clean-burning natural gas but also with the purification of biogas. Biogas is primarily composed of methane obtained by allowing bacteria to digest food and animal waste, garbage, and sewage. As this technology becomes easier to install and operate, the relatively untapped market potential is enormous. Biogas production helps eliminate waste and reduces the quantity of climate-changing greenhouse gases by burning them and producing clean energy.
Value-priced shares of Xebec Adsorption are expected to rise to between $4.50 and $7 over the next year, which represents an increase of between 20% and 100% over today’s price. With operations primarily in Canada, the United States, and China, this is a company poised to take advantage of expanding energy markets.
With more individuals, companies, and even countries looking for alternative sources of energy, there can be no doubt that the future is in green energy. Taking advantage of the still relatively new green economy in its early stages could provide you with huge growth in the near future. An investor looking for the potential of big returns on their equity investments should definitely take a closer look at these three companies.
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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.
Fool contributor Jason Sparling has no position in any of the stocks mentioned.