This week, I’d discussed why Canadian investors need to prepare for the green energy boom this decade and beyond. The United Nations Climate Change Conference, or COP26, is set to wrap up tomorrow. World leaders have gathered to make further pledges aimed to curb climate change. Investors can safely ignore the political mud slinging and feel comfortable betting on the growth of renewable energy. Today, I want to look at two of the best green energy stocks to snatch up in November.
Where is the renewable energy space heading in the 2020s?
As I’d discussed in the article above, renewables like solar and wind have contributed much more than anticipated by the end of the previous decade. Energy consumption declined in 2020 due to the devastating impacts of the COVID-19 pandemic. However, that has reversed in 2021 and should continue to see an upward trajectory in 2022.
The International Energy Agency (IEA) reported that annual renewable capacity additions rose 45% to nearly 280 GW. This was the highest year-over-year increase since 1999. This is expected to become the “new normal” in the coming years. Indeed, the IEA anticipates that renewables will account for 90% of new power capacity expansion globally. Investors should be chomping at the bit to get in on this space.
This green energy stock is still undervalued today
Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) is the first green energy stock I’d suggest investors target right now. This stock has looked like a value add for weeks. I’d suggested that readers snatch up Algonquin last month. Shares of this green energy stock have dropped 13% in 2021 as of close on November 10. Algonquin owns and operates a portfolio of regulated and non-regulated generation, distribution, and utility assets.
The company is expected to release its third-quarter 2021 earnings after the market closes today. In Q2 2021, Algonquin posted revenue and adjusted EBITDA growth of 54% and 39%, respectively. It was powered by recent acquisitions while it also was able to build on its Midwest expansion.
Shares of this green energy stock possess a favourable price-to-earnings (P/E) ratio of 12. It offers a quarterly dividend of $0.171 per share. That represents a solid 4.8% yield.
Here’s another renewable-focused equity that offers a 5% dividend yield
TransAlta Renewables (TSX: RNW) is a Calgary-based company that develops, owns, and operates renewable power-generation facilities. This green energy stock has plunged 17% in the year-to-date period. Its shares are still up 7.3% from the previous year.
Investors got a look at its third-quarter 2021 earnings on November 9. Comparable EBITDA rose $6 million year over year to $102 million. Meanwhile, adjusted funds from operations plunged $19 million to $57 million. This decline was largely due to higher interest expense attributable to financing at another project. Still, net earnings per share in the year-to-date period more than doubled to $0.36.
This green energy stock last had a P/E ratio of 33, which puts it in solid value territory in comparison to its industry peers. Better yet, it offers a monthly dividend of $0.078 per share. That represents a strong 5% yield.
