The stock market is crashing, and energy stocks are in turmoil. Enbridge finally hit a 52-week low this week, and even Fortis was grinding at a year-long low. It’s certainly been a tough few months for energy investors. 2019 saw oil prices flattening, but the hydrocarbon market is crashing even further this year. However, there is at least one growth stock to buy as the market is crashing.
The right time to invest in renewables
TransAlta Renewable, a classic example, is down 30% this week. That puts it a hair’s breadth above its 52-week low. This is not so Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). The solidly diversified stock is a long way off its yearlong low. It’s not exactly flying with 24% off this week. Any other week and that would look terrible. But this is no ordinary week by any stretch of the imagination.
Instead of shredding your portfolio when the stock market is crashing, use the awakening bear to get invested in stocks like Brookfield Renewable Partners. Watch for the bottom, though — we likely haven’t hit it yet. Pay attention to updates on the coronavirus, and watch how they correlate with the market. But keep an eye on other indicators, too. International markets, oil prices, consumer sentiment, bonds, and gold prices all play a part.
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Should you keep buying if the market is falling?
Investors are fleeing risk right now. Over on the NYSE, Eli Lilly is looking like a buy as it commits to developing coronavirus therapies. This will happen in conjunction with Vancouver’s AbCellera Biologics. Clorox was also performing above other stocks on the S&P 500 at the end of the previous week. It was joined by Newmont, one of only a handful of stocks to beat the initial sell-off last week.
Renewable options are starting to become cheaper than oil. Capital efficiency is going to be key as the markets are falling in 2020 and beyond. This will make a reliable green energy stock investment a more sustainable source of income in portfolios.
Buying shares in Brookfield Renewable Partners as the stock market is falling locks in a tasty 5.3% dividend yield. That payout is fed by a strongly diversified spread of energy sources and countries. Operations cover North and South America, Europe, and Asia. The latter is of particular note, with the company pumping $4 billion into growth by acquisition in the region. Hydroelectric, wind, solar, and storage are key segments.
Shareholders in Brookfield Renewable Partners might expect total returns of 94% by 2025. This includes capital appreciation in the region of 44%, something that may increase as oil fails. That dividend may also be set for a rise, dependent on how this name’s payout ratio changes. This growth is fed by a projected 91% annual growth in earnings, which is likely to be met by that Asian expansion.
The bottom line
Selling hydrocarbon stocks is part of the investor migration to safety. But buying should form part of this strategy, too. Green energy is a solid buy, as the oil market is crashing towards unprofitability. Buying shares in diversified renewables is therefore a strong play right now.
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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 Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.