Buy or Pass? 3 Cheap Renewable Energy Stocks

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Written by Adam Othman at The Motley Fool Canada

The global energy industry is on its way toward a massive change. The transition from fossil fuel-reliant energy production systems to clean and green energy sources has been underway for a while.

However, increasing climate change concerns have prompted accelerating renewable energy adoption worldwide. Renewable energy stocks are already on their way to become some of the most sought-after assets to own for outsized gains.

As of this writing, the S&P/TSX Composite Index is down by almost 3% from its January 2023 high. While not a significant decline, the downturn in the Canadian benchmark index suggests a pullback in the broader stock market. As such, stocks across most sectors of the economy are experiencing a pullback, including renewable energy stocks.

With valuations too cheap to ignore, I will discuss three TSX renewable energy stocks you might want to keep on your radar as stellar long-term growth stocks.

Brookfield Renewable Partners

Starting with the biggest of the three, Brookfield Renewable Partners (TSX:BEP.UN) must be the most attractive renewable energy stock in Canada right now. The $10.05 billion market capitalization stock is a subsidiary of one of the world’s largest alternative asset management companies. BEP stock owns and operates a growing portfolio of globally diversified renewable energy assets.

With a power capacity of 24 gigawatts (GW) right now, the company plans to invest over US$6-$7 billion to further increase its global presence and renewable power production capacity. As of this writing, the stock trades for $36.48 per share.

With the latest market pullback, it is down by 31.2% from its 52-week high, making it too attractively priced to ignore. It also offers dividend payouts at a juicy 4.93% dividend yield you can lock in at current levels.

Northland Power

Northland Power (TSX:NPI) is one of the first independent power producers in the country. The $8.28 billion market capitalization company develops, builds, owns, and operates a massive portfolio of clean and green energy infrastructure assets.

While it has operations involving natural gas, it is a primarily renewable energy-focused power producer, generating most of its revenue through offshore wind farms. Its efficient natural gas and onshore renewable assets also contribute significantly to its balance sheets.

Awarded a 2.3-GW project in the Scotwind offshore wind lease auction and a 500-megawatt (MW) project in the Taiwan offshore wind auction, it has plans to keep growing its assets and further its power-generation capacity.

Combined with additional opportunities across solar power facilities, it has room for plenty of financial growth in the coming years. As of this writing, NPI stock trades for $33.13 per share. Down by almost 30% from its 52-week high, it boasts a juicy 3.62% dividend yield.

Innergex Renewable Energy

Innergex Renewable Energy (TSX:INE) is the smallest of the three, but not one to shrug aside. The $2.91 billion market capitalization company is an independent power producer that owns, develops, and operates run-of-river hydroelectric facilities, solar energy, and wind energy farms in North America, South America, and France.

Additionally, it has interests in over 80 operating facilities, with 13 projects already under development and several other prospects at different stages of development.

Its geographically diversified portfolio of high-quality assets position it well for substantial long-term returns. It has been performing well financially, reporting a 40% year-over-year increase in its revenue for the third quarter of 2022 and a 74% increase in its free cash flow in the same period.

As of this writing, INE stock trades for $14.27 per share. Down by 30.25% from its 52-week high, it can be an exceptional addition to your portfolio for long-term gains.

Foolish takeaway

As countries worldwide become increasingly conscious of fossil fuel’s environmental impact, the demand for renewable energy is growing rapidly.

Where there is plenty of demand, there is a lot of money to be made. If you have a long investment horizon and seek outsized gains, adding at least one or two of these renewable energy stocks might be a strong bet.

The post Buy or Pass? 3 Cheap Renewable Energy Stocks appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.