There are few industries that provide investors with the opportunity that renewable energy provides. This sector offers several ways of getting into clean energy investing. And yet none so great as Brookfield Renewable Partners LP (TSX:BEP.UN).
BEP stock, however, has seen its share price remain around $35 per share for quite some time. And that’s been hard on investors who purchased back at around $70. So are we to see this price again?
In my view, yes. Which is why I would consider picking up this stock in bulk, and to buy like there is no tomorrow.
A bit about Brookfield
BEP stock owns and operates a slew of diverse renewable power assets around the world. Though headquartered in Canada, BEP stock is diverse in not just the types of renewable assets it holds, but its locations. In fact, BEP’s parent company is Brookfield Asset Management (TSX:BAM). BAM stock has over 100 years of experience as an operator of renewable energy sources, dating back all the way to the 1890s in Brazil.
Fast forward to today, and the company has had quite a successful few decades. Though shares may be half where they were a few years ago, BAM has grown 325% since coming on the market in the 2000s. The value-oriented investor has been growing through purchases, builds, and mergers and acquisitions, making it now a hugely diversified energy operator.
In fact, during its most recent quarter, the company was able to close its acquisitions of X-Elio and Deriva Energy, and advanced the acquisition of Westinghouse Electric. Furthermore, it hopes to close its Origin Energy investment soon as well. This would all provide even more opportunity for investors.
How so?
You might be wondering to yourself, why are shares falling if the company is growing so much? Yet therein lies the problem. We continue to see higher interest rates and inflation that have weighed on BEP stock. BEP continues to work on creating savings in capital expenditures. However, that hasn’t quite occurred yet.
But the company has something others don’t, and that’s the backing of BAM stock. Furthermore, it continues to generate stable free cash flow (FFO) to help pay for not just these projects, but future ones. Therefore, the company still expects to deliver on its decade-long track record of over 10% in FFO per unit growth per year.
Another good sign? BEP stock recently received approval for the repurchasing of up to 14,361,497 units. This would represent 5% of its outstanding shares. This buyback suggests management sees the stock as undervalued. And analysts do as well.
What’s next
For now, BEP stock looks highly undervalued for those seeking a long-term growth stock. The company’s shares are down 12% in the last year, and again half of where they were back in 2021. It also trades at just 1.4 times sales, 1.5 times book value, and 12.1 times enterprise value over earnings before interest, taxes, depreciation and amortization (EV/EBITDA).
Then there’s the fact BEP stock holds a 5.25% dividend yield, which is far higher than its 4.32% average of the last five years. All in all, this is a growth stock that’s only going to grow higher. Which is why it remains a strong buy on the TSX today.
