Brookfield Renewable Partners looks really interestingBrookfield Renewable Partners looks like it may have found a bottom from its roughly 20% decline from it ATH.
The renewable energy sector could be a growth fad to some extent, however, my feeling is that if the renewable energy sector can scale and reduce the cost related to renewable energy technology, then why wouldn't it gain in market share particularly in developed markets?
based on the available reported numbers i have roughly calculated that from 2009 - 2020 (11 years) the company has grown its operating expenses by 8.7% per annum whilst it has grown its revenue by 8.6% per annum. That's a really attractive rate of growth but without knowing more about the company i wonder to what extent they are growing their operating expenses by reinvesting in the company. I would certainly hope that the growth in operating expenses has come predominantly through reinvesting in operations.
If we look at the operating margin for more clarity in the numbers we can see that from 2009 - 2020 (11 years) the company has grown its operating margin by 33.8% per annum.
Interesting...
Better yet its average free cash flow since 2012 is 22.56% per annum.
So what concerns me? The average debt to EBITDA from 2009 - 2020 (11 years) is 7.6x with its last reported debt to EBITDA at 8.2x. Ouch!!!
That not what I'd call a healthy stat.
Its definitely one of those companies that carries a high degree of risk due to the fact that its highly leveraged. As long as they can continue to grow their revenue and reduce their debt levels to something far more reasonable, this could be a really nice company to own for the next 5 years.
In terms of the current entry point, it looks attractive based on the DeMarker and Stochastic Momentum Index.
I wouldn't take a large position in the company more of a punt at this point.
Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.
BEP.UN trade ideas
Brookfield Renewables: Good Buying Opportunity Off the DipMany utility stocks across the TSX and NYSE underwent a falling descending triangle - in fact, many of them seemingly corrected about 5% (ironically) on the same day and around the time (near when phase 1 progress was announced not long ago).
Brookfield Renewable Partners (BEP) is one of the finest utility stocks as its led by Bruce Flatt who is regarded as one of the top real-estate investors in Canada of all time and he will never have any issue raising money should the company ever need-be for acquisitions. Acquisitions are king in the renewable space and this is a key pro for the company.
Utilities have outperformed a little too much in 2019 as an entire sector in my opinion as a result of the uncertainty around global growth, and as a result I see the first half of 2020 providing somewhat muted gains for the sector as a whole, however, as we prove through 2020 midway, I expect economic data to wane once again and this will lift the sector up .
Many utility stocks continue to trade at around 35-50 P/Es which is extremely high for the sector which was just regarded as passive income, not "wealth appreciation".
Nonetheless, for those looking for a decent entry point in a top renewable utility sector (which will be the future), this is the time to monitor closely and buy a position in the stock.
As always, never buy stocks all at once in one lot as tempting as it might be.
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falling wedgePlease excuse the messy annotations. This is my first attempt to use Elliot wave .
Based on my interpretation we are heading towards the end of a C subwave or the end of an wave 5 of an inverted impulse wave.
if it heads towards the bottom end of the wedge and bounces it may be an abcde correction.
overall if we take a step back and look i believe we are headed towards a larger wave 5 impulse.
We can see some bullish divergence on the rsi .
Because wave 1 is usually the same length as wave 5 we may reach targets as high as 68.
Brookfield Renewables: Top Investment over the next DecadeThere's no question about it that one sector that will be extraordinary over the next half decade, decade and many decades after is renewable energy. The world is certainly transitioning - or attempting to transition - to fuel cells, wind, solar and derivatives in order to create a more "environmentally friendly earth".
Brookfield has one of the best real-estate investors of all time (Bruce Flatt) who is one of the top Canadian investors and notoriously known for exceptional investment philosophies. This company focuses essentially on acquiring, selling and occupying existing or developing renewable energy platforms around the world. Bruce is also a champion at raising money and should he feel the need to do so, many of the wealthiest people will be quick on board.
Renewables will be a sector that will be set for parabolic gains for the next several years and you certainly want to be in them in a big way, even moreso than traditional utility stocks.
Furthermore, if you do your research there are several large firms and insiders that have been stockpiling shares in this stock in the tens and hundreds of thousands of shares over the last few weeks and few months. As a result, this stock could very well do what NextEra Energy has done where it turns parabolic in the next 2 or 3 years and quadruples in numerical stock value.
For those who look at this stock and are frightened by the P/E, you must know that Brookfield has separated their assets into 4 or 5 different sub-groups, therefore in this case, the high P/E ratio is nothing to be scared of as it is one large asset managed company but in sectors so investors can choose what they want.
Technically, the stock posts higher momentum short squeezes by the day and has broken out tremendously out of a large consolidation path.
A sector that will go parabolic in the next decade and a yield over 4.4%, what more can you ask for?
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