Opinions
Paul Harris, CFA
Brookfield Renewable Partners
BEP.UN-T
COMMENT
Dec 30, 2016
Stock price when the opinion was issued
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Total return is positive because of the distribution yield. Rough year for the sector. New US administration doesn't support the sector; removal of tax credits is a headwind. Long-term secular growth theme, with near-term hiccups and volatility. MSFT agreement gives visibility to revenues, other companies want similar agreements.
Need for energy and power continues to increase. About half its assets are hydro, which she likes for long-term growth. Geographic and asset diversification. Huge deal with MSFT, which should increase production by ~33%. Joint venture with CCO to do Westinghouse nuclear servicing, and she's bullish on clean energy. Poised to do well. Yield is 5.77%, and dividends grow 5% a year.
(Analysts’ price target is $39.39)Undervalued. Well run. Diverse assets. Lots of hydro, as well as solar and wind, both in NA and globally. One of the leading players internationally. Huge increase in demand in electricity from data centres and AI; many of the hyperscalers want to use clean energy. Deal with MSFT.
Near-term underperformance and tax-credit concerns from the "big, beautiful bill", but long-term trend toward renewables is intact.
The chart for AQN tells the story for the sector.
Seeing signs of improvement. Both AQN and NPI have moved above 200-day (40-week) moving average, a positive. Especially so because a lot more quant funds are moving $$ in the markets, and one of the triggers they look at is whether or not it's above that technical level. It it's above, they can buy it; if not, either they can't buy it or they short it. Likes the regulated utilities -- FTS, H, EMA, CU, CPX.
If he were less cautious, he'd be more bullish. Not a big fan. More of a value play. Technically, they've been laggards. Better places to put your $$.
BN to hold the entire Brookfield family, and BM is at a discount than it has been for a while. BEP trades at a premium among renewables, which have been under pressure from Trump cancelling wind and other green projects. Also, Northland Power is far better than BEP, given NPI's better valuation and growth potential.
The dividend yield is good. All these Brookfield companies have the ability to get involved in certain types of projects and are very good at it. When they get involved in projects, you have to look at what they are paying for them and what the return expectations are. Feels these infrastructure plays are going to do well over the next little while, and these types of companies have the ability to get involved and generate some great returns. He prefers Brookfield asset management (BAM.A-T).