Northland Power Inc (NPI.TO)

The issue is interest rates. If you bought for the dividend then you can hold for when interest rates are lower. If you bought for growth then sell it.

All renewables got ahead of themselves. Some exposure to price caps in UK. Longer term, you want exposure to renewables and NPI should participate. Good long-term hold in the offshore wind space.

He scaled back on a lot of renewables. A great long-term investment theme, but interest sensitive and also cost sensitive. Laying out huge amounts of capital for development projects. With labour and material costs going up, hard to maintain level of investment returns they're used to. It's about rising rates and capturing that investment return. He owned it until recently.

Experts at offshore wind. Cost overruns are manageable. Overhang is financing huge backlog of projects. Market didn't like its issuing shares. Bond hybrid now funds its needs. Taiwan project has political risk. Huge opportunities in Europe. Possible acquisition target because it's small.

A top renewable play. Had a balance sheet problem, but sold 49% in their North Sea project. Good. It has survived tough sledding, but remains expensive at 26x PE with limited growth. Overall, he likes it, but prefers BEP.UN.

NPI faces challenges in the short-term, but I’m confident that given management’s track record that NPI will stickhandle them and come out stronger down the road. Inflation and rising rates have been a double-headed problem for all utilities, but are showing signs of easing. The share sell-off on that recent earnings miss was deserved, but overdone as shares hit a 52-week low of $27.20. Right before Victoria Day, shares recovered to nearly $30. Read 3 All Canadian for our full analysis.

Rising interest rates have not been friendly to any renewable energy stocks like NPI , but this company’s fundamentals remain sound. NPI trades at only 9.65x PE, a beta of 0.39, pays a 3.59% dividend at only a 34.68% payout ratio, and boasts a quarterly earnings growth of 168.4% year-over-year. NPI has handily beaten its last four quarters. It boasts wind, solar and hydro projects across the world, with a strong presence in Europe especially, where the company is adding 2GW of capacity in the next two years, and Asia. In late-February, NPI announced strong full-year results of revenue up 17% from full-year 2021, net income soaring 357%, and their profit margin climbing 8.5%. EPS beat the street by 28%. Read Budget winners for our full analysis.

It is one of Canada's largest renewable energy producers with some big projects in Europe and the far east as well. The stock is down because of rising rates. It has monetized some assets so their funding is adequate and they shouldn't have to issue stock.

Three big projects on the go, and the question was how were they going to be financed. Yesterday, they issued about $450M in two tranches of debt. With buildouts over the next 2 years, may see free cashflow go down a bit. Longer term, one of the better companies in wind energy, etc. Reasonable place to be. Not a tremendous yield of 3.5%. You're buying it for future increases in FCF.

None of the renewable businesses are under pressure on the dividends, but it's the valuations. He likes them for growth and ESG reasons, but hasn't made the switch. Once he did make the switch, NPI would be one of the first names on his list.

Owns shares in the company.
Strong renewable business (wind power).
Operations globally helps to diverse income.
Good long term investment.