2 Renewable Energy Stocks That Can Outperform the Market for Years

·4 min read
Clean energy

When looking to buy stocks for the long-term, often the industry the company operates in can be as important as its operations. This is why renewable energy stocks are some of the best Canadian stocks to buy today for the long term.

Just because the industry offers potential, though, doesn’t just mean you can buy any green energy stock.

You want to buy the best stocks, capable of executing a strong growth plan over the coming years. While there’s plenty of potential in the space, even in an industry that can outperform the market, there will be companies that underperform.

So it’s crucial you’re buying the highest quality business that you have confidence can outperform over the long term.

Here are two of the best-looking renewable energy stocks to buy today.

A top green energy company to buy for long-term growth

Renewable energy stocks have a tonne of potential, but they’ve also been growing rapidly for some time. One of the most impressive businesses so far has been Northland Power (TSX:NPI), and it continues to look like one of the industry’s top performers going forward.

The fact that it’s been a top growth stock until now is important because Northland has proven to have a top management team capable of strong execution. And it has a promising growth plan, which will be paramount to take advantage of this major global transition.

The transition to cleaner energy is crucial to begin to reverse the effects of climate change and will last for years to come. So to take full advantage of the opportunity, you want to own the best stocks like Northland.

Northland has an impressive portfolio of offshore and onshore wind, natural gas, and solar generating assets. It also owns a utility business.

And while Northland has an impressive portfolio today, its future growth plans are what’s most attractive. The renewable energy stock plans to spend up to $20 billion over the next five years to grow its operations.

These initiatives are expected to help Northland double its operating earnings over the next seven years. That’s extremely impressive growth. And the company expects to grow at this rapid pace all while continuing to return cash to investors.

The analysts who cover it have an average target price just south of $50 a share, roughly 20% upside from today’s price. This just goes to show that it’s undervalued today, making it a great buy.

The largest renewable energy stock in Canada

In addition to Northland, another top Canadian stock to consider is Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP).

Brookfield is a massive company and the largest renewable energy stock in Canada. Not only that, but it has one of the most impressive portfolios that’s well-diversified by asset type and geographically.

Brookfield has an installed net generating capacity of roughly 9,000 megawatts. In addition, it has another 1,000 megawatts in construction or development.

Its portfolio consists of mostly hydro and wind with some solar assets and storage facilities. And as I said earlier, it’s spread out worldwide, with operations in the United States, Canada, South America, Asia, and Europe.

One of the main reasons to buy a top renewable stock like Brookfield is its incredible ability to source high-value investments. Brookfield is well known to buy undervalued or underperforming assets that it sees potential in. It can then improve those assets increasing their value and the cash flow they yield.

This is how the business can grow so rapidly. It’s also why the company targets up to 15% annual growth for investors over the long term.

So with that type of growth potential, in an industry that’s primed for a major expansion, Brookfield is certainly one of the top renewable stocks to buy today.

The post 2 Renewable Energy Stocks That Can Outperform the Market for Years appeared first on The Motley Fool Canada.

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Fool contributor Daniel Da Costa owns shares of Northland Power Inc. The Motley Fool has no position in any of the stocks mentioned.

2021

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