Investors have been taking note of green companies in recent years. Companies that operate within the renewable energy and electric vehicle industries have seen their stock prices skyrocket. Examples include NextEra Energy and Tesla. These companies have seen their stock prices increase by 189% and 1,223% over the past five years, respectively.
In Canada, Brookfield Renewable Partners (TSX:BEP-UN)(NYSE:BEP) stands as a leader among green companies. The company operates a portfolio of 5,318 generating facilities in North and South America, Europe, and Asia. All considered, Brookfield Renewable has a generating capacity of approximately 19,400 MW.
Of course, it is easier to look back, but this leads us to the question at hand. How much would you have if you invested $10,000 into this company in 2003?
$10,000 invested in Brookfield Renewable in 2003 would be worth…
On December 14, 2003, Brookfield Renewable’s split-adjusted price was $13.19. At the time of this writing, the company trades at $74.19 — a total gain of 1,610%! On average, your investment would have seen an annual return of 18.17%. With those kinds of numbers, your $10,000 investment would be worth $170,931 today.
This compares to a 121% return by the TSX over the same period. Just to compare, investing the same amount into an index fund tracking the TSX, your investment would be worth $22,120 today — certainly an outcome that would still please investors. However, it goes to show how much better your investments could be with the right stock picks.
Where is Brookfield Renewable stock headed?
As mentioned previously, green companies have seen a large influx of investors in recent years. This has largely been driven by a society with a much stronger desire to address the issue of climate change.
Companies that operate renewable energy facilities have continued to see strong growth in 2020. Examples include Northland Power (year-to-date return: 63%) and Innergex Renewable Energy (49%). Prior to the American election this year, Joe Biden promised to support clean energy initiatives. If this happens, then this industry should see tremendous growth over the next few years.
Brookfield Renewable also appears committed to prioritizing growth. In Q3 2020, the company reported that it had closed the acquisition of a 1,200MW shovel-ready solar project in Brazil. If the company is able to keep with its smart capital allocation, it should remain as a global leader in renewable energies for the foreseeable future.
Although companies such as Shopify or Constellation Software boast more impressive numbers, Brookfield Renewable is an excellent example of a company that would have rewarded patient investors over the long run. With a much more modest average annual return of 18%, your $10,000 investment in 2003 would be worth more than $170,000 today.
When looking for companies that have the potential to return multiples upon your original investment, investors should look for companies with traits similar to Brookfield Renewable. These may be companies that have a solid management team, lead an important, emerging industry, or have a sustainable advantage over its competitors.
If investors manage to find a company that fulfills these traits, and gives the investment adequate time, they should be able to replicate these results.
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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 Jed Lloren owns shares of Shopify and Tesla. David Gardner owns shares of Tesla. Tom Gardner owns shares of Shopify and Tesla. The Motley Fool owns shares of and recommends Constellation Software, Shopify, Shopify, and Tesla.