Why Brookfield Renewable Is the Most Valuable Stock on the TSX Today

This is your sign to dig into Brookfield Renewable (TSX:BEP.UN)(NYSE:BEP) fundamentals, and see it as the value opportunity of a lifetime.

| More on:

Brookfield Renewable (TSX:BEP.UN)(NYSE:BEP) has had a rough year. After reaching all-time highs of around $70 a year ago, it’s now nearing what analysts have called “the floor.” And there are unfortunately two sides to this flipping coin.

On the one hand, analysts believe Brookfield and other renewable companies on the TSX today will outperform. In fact, many continue to upgrade these stocks. At the same time, analysts also trimmed their target prices for these companies. And that includes Brookfield.

And yet, that’s what makes the company the most valuable stock on the TSX today.

Today’s situation

It’s a dire one, I’ll give you that. Brookfield Renewable seemed to have the world at its feet a year ago. The company was in the right field at the right time, with new US President Joe Biden announcing investment into renewable energy companies like Brookfield.

Yet after soaring to all-time highs, shares soon dropped in this area. This came as many realized it would be a long while before Brookfield and others would see the benefits, causing them to take their returns. This situation only worsened as the market became unstable once more.

Growth stocks have now been set aside for value stocks that can provide stable growth. In Brookfield’s case, it doesn’t seem to fall into this category. But I would argue, along with many analysts, that this is actually an opportunity in disguise.

What analysts say

BMO Nesbitt Burns analyst Ben Pham recently came out with his own opinion about the future of Brookfield and other renewable companies. While he believes the stock will soon outperform, he also cut his target from US$40 to US$38. That would be a potential upside of almost 20% as of writing.

So why the change on the TSX today? Brookfield Renewable is “one of the largest publicly traded renewable power companies with a global footprint across all key technologies, BEP is the ‘go-to’ for renewable power investment,” Pham said. He went on to say its 10% growth rate, scale, and balance sheet will allow for growth for the fund without seeking outside help.

The next decade will prove its worth

Investors have to remember, the TSX today is a scary place. We’re still in the midst of a pandemic, and that’s what the government needs to fund immediately. At the same time, governments around the world aren’t ignoring renewable energy completely. It’s therefore a great time to get in on the action before the boom.

And there will be a boom. While the first few years will be rocky, Brookfield Renewable offers a strong place to put your investment and see stable returns in the decade to come. The more the world invests, the stronger it will be. And that’s again without counting on external funding.

Don’t let the share price fool you. The third quarter delivered record-high funds from operations, with several growth opportunities executed. It continues to be the world’s leading diversified clean energy business. Therefore, it’s the most likely to benefit from the growth in clean energy around the world.

Yet shares are down 34% in the last year. In the next year, that share price is set to explode. The average target price remains at $52, giving investors a potential upside of 24% as of writing. And there’s a nice 3.69% dividend yield while you wait. That’s a value stock anyone should jump on while they have the chance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns Brookfield Renewable Partners. The Motley Fool has no position in any of the stocks mentioned.

More on Energy Stocks

oil pump jack under night sky
Energy Stocks

Is CNQ Stock a Buy, Sell, or Hold for 2025?

CNQ stock is down in recent months. Is a rebound on the way next year?

Read more »

a person looks out a window into a cityscape
Energy Stocks

2 No-Brainer Energy Stocks to Buy With $500 Right Now

Two low-priced energy stocks can reward investors who have limited capital with far superior returns than expensive peers.

Read more »

canadian energy oil
Energy Stocks

Where Will Suncor Stock Be in 1 Year?

Suncor Energy Inc (TSX:SU) stock is doing well this year. Will it still be doing well next year?

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Best Stock to Buy Right Now: Cenovus vs Baytex?

It may not seem like a good time to buy most energy stocks, but there are always exceptions.

Read more »

A bull and bear face off.
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for November

These three dividend-payers are on a bullish uptrend.

Read more »

analyze data
Energy Stocks

Buy 8,850 Shares of This Top Dividend Stock for $2,000/Month in Passive Income

Let's do the math on what it would take to generate $2,000 a month in passive income from Enbridge (TSX:ENB)…

Read more »

oil and gas pipeline
Energy Stocks

Is TC Energy Stock a Good Buy?

TC Energy stock has a lot going for it, but there are also a few red flags to consider before…

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

Is Canadian Natural Resources Stock a Good Buy?

CNRL is an energy giant with a market capitalization near $100 billion.

Read more »