If there’s one sector of the stock market that generated a lot of excitement, followed by a huge let down, it has to be renewable energy stocks. However no matter how you slice it, this sector still has the potential for massive returns in the near future.
In fact, now provides some great opportunities. Especially if you’re patient and find a renewable energy stock with a diversified portfolio. And as a matter of fact, there’s one low-performing stock that provides just that.
Brookfield Renewable
Brookfield Renewable Partners LP (TSX: BEP.UN) ticks all the boxes. The company provides a strong, diversified portfolio of clean energy assets. Through a combination of both organic growth and acquisitions, the company targets 12% to 15% returns each year, with a focus on hydro generation to start.
However, in recent years there has been a shift to a far more diverse set of assets. The company has seen major growth in wind and solar, and created a partnership with Cameco for uranium power as well. This sets the company up for not just distant-future growth, but also growth during the energy transition as well.
The company is not only diversified by assets, but also on a global scale. Brookfield Renewable stock has expanded throughout North America, Latin America, and especially in Europe and Asia during recent years. There are likely to be even further opportunities coming the company’s way, especially through frequent acquisitions.
Not without issues
While diversification has been great, and more growth continues, Brookfield Renewable stock hasn’t been without its own issues. That’s especially as shares grew to around $70 per share when President Biden came to power in the United States. This quickly slipped away, with shares now at half the price they were back then.
That’s all while higher interest rates and inflation have hurt the stock again and again, with large capital needed if it hopes to invest in more projects. While it does have a parent company that could certainly help with funding, it will need to prove successful if it hopes to achieve this.
Yet even so, analysts believe the share price is below fair value. The average price target remains at about $42 per share, as of writing. The company is predicted to continue outperforming as well. But are analysts truly on board with a buy today?
Could this make you a millionaire?
The higher interest rates that we’re seeing today could certainly create problems for many renewable energy stocks. However, for Brookfield Renewable stock this could be an advantage. It has the cash and ability to achieve this, giving it a major growth opportunity in the next few years. With a 150-gigawatt development pipeline added in, and its proven status as a renewable energy provider on a global scale, there could certainly be more growth on the way in share price.
In fact, analysts believe in the next three years investors should see 10% growth in funds from operations per unit. While for now share prices are on the lower side for the next year. This could be far higher as the years go on.
So could Brookfield Renewable stock make you a millionaire? In my opinion, it certainly could in the next 10 to 20 years, depending on your investment. In the next decade that $70 share price in fact looks quite likely, which would allow your investments to double in that time. The choice is yours, but it certainly looks like a great option on the TSX today, with a 5.15% dividend yield while you wait.
