The Best Renewable Energy Stocks to Buy Before They Take Off

Some of the most rewarding investments are made before they come into the spotlight. Right now, renewable energy may be one of those under-the-radar trends. Although sector valuations have dipped amid macroeconomic worries and rising rates, many Canadian renewable energy stocks are still financially strong, generating positive cash flow, and ready to benefit from long-term demand trends.

In this article, I’ll talk about two of the most promising renewable energy stocks on the TSX that could be set to take off in the near future.

Brookfield Renewable stock

One renewable energy stock that looks really attractive right now is Brookfield Renewable Partners (TSX: BEP.UN). It runs one of the world’s largest renewable power platforms, with many major hydroelectric, wind, solar, and battery storage projects spread across multiple continents. The company is also expanding into carbon capture, nuclear services, and recycling — making it a large clean energy platform.

Brookfield Renewable stock currently trades at $32.25 per share with a market cap of $9.2 billion. With a strong 6.7% annualized dividend yield, it’s an appealing option for income-focused investors.

In the fourth quarter of 2024, Brookfield Renewable’s total revenue climbed nearly 19% YoY (year over year) to US$1.43 billion. At the same time, its adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 16.6% to US$618 million. The company did post a small adjusted loss of US$9 million for the quarter. But that was mostly due to short-term development expenses, not a sign of weakening fundamentals.

One of the factors that make its stock exciting is its massive future pipeline with nearly 200,000 megawatts of clean energy projects. So, if you’re looking for long-term potential in a sector with global tailwinds, Brookfield Renewable could be a great, under-the-radar stock worth owning.

Innergex Renewable Energy stock

If you’re bullish on the clean energy transition, Innergex Renewable Energy (TSX: INE) is another one to consider for TSX investors. This Longueuil-based company develops, owns, and operates renewable energy storage facilities across Canada, the U.S., France, and Chile. It’s already managing roughly 90 operating assets and has a big development pipeline ahead.

INE stock is currently trading around $13.60 per share with a market cap of $2.8 billion. The stock has seen a big comeback, climbing 68% in the past year, and offers a quarterly dividend with a 2.7% annualized yield.

Innergex’s revenue in the latest quarter ended December 2024 rose 9% YoY to $286 million, while the company’s adjusted EBITDA grew by 13% from a year ago to $210 million. Its quarterly net profit came in at $33.2 million, reflecting a major improvement from a loss in the year-ago period. Meanwhile, Innergex’s free cash flow remained stable at $1.06 per share, beating guidance and helping slash the company’s payout ratio from 68% to 34%. The key factors driving this momentum are a mix of strong wind and hydro production, solid execution of new projects, and a deep pipeline of developments. With a diversified portfolio, strong results, and ambitious clean energy plans, Innergex stock could be an amazing stock for investors looking to benefit from the renewable wave.