Three Energy-Boosted Shares with Potential for Further Ascension
The financial markets have hit new records this year. A mix of decreasing interest rates, a positive economic outlook, and clear post-election conclusions have given a boost to the majority of equities.
Several equities still seem to have untapped potential for further growth. Cameco (-0.89%), Brookfield Renewable (2.24% and 1.59%), and Brookfield Infrastructure (3.29% and 1.16%) stand out to certain contributors from Fool.com as investments with significant potential for growth, despite their recent impressive returns. Let's take a closer look at why they are considered appealing investment opportunities at the moment.
Cameco holds the key to expansion
*Reuben Gregg Brewer (Cameco): Some investors have expressed concern following a recent regulatory decision regarding the prospect of reopening dormant reactors. However, aside from that, the nuclear power sector in the United States has largely seen favorable developments in recent times. Prominent supporters of the industry include tech behemoths like Microsoft, Alphabet, and Amazon*.
Nuclear power is a unique source of energy that does not produce carbon dioxide and is always available, unlike intermittent sources like solar and wind. For data centers with high power demands, this is a significant advantage. Furthermore, companies such as NuScale Power are working on constructing compact modular nuclear reactors, which are expected to be safer to operate, simpler to build, and adaptable enough to be transported to their intended locations. In this context, Cameco plays a crucial role as it is one of the world's largest uranium miners. The stock has gained over 30% in just three months on the currentexcitement surrounding nuclear power. If this enthusiasm persists and leads to further approvals and even construction of nuclear power plants, Cameco could continue to climb.
However, it's important to consider that uranium is a commodity that is influenced by supply and demand. If the nuclear power trend fails to materialize, Cameco's stock price increase could level off. In other words, if you decide to invest in Cameco, you must first believe that nuclear power is in the early stages of a new industrial age.
Outstanding growth potential ahead
*Matt DiLallo* (Brookfield Renewable): Brookfield Renewable has achieved impressive growth over the past few years. The leading renewable energy producer has increased its funds from operations (FFO) per share by 12% each year on average since 2016. It is projected to deliver 10% or higher FFO per share growth once again this year. This has contributed to an increase of more than 20% in its share price over the past 12 months.
The renewable energy sector has enormous potential for continued growth. Brookfield Renewable expects to achieve an annual FFO per share growth rate of over 10% throughout the next decade. This growth is highly visible and assured through 2029, with even greater visibility and assurance beyond that period.
A key driver of this growth is Brookfield's extensive development pipeline. The company has over 230 gigawatts (GW) of projects at various stages of progress, including 65 GW in advanced stages. It anticipates adding 10 GW of capacity annually over the next several years, including delivering more than 10.5 GW to Microsoft within the 2026-2030 timeframe. The rising price of energy provides additional visibility to its growth. It expects escalators in existing contracts and higher market rates as existing agreements expire to increase the earnings of its current portfolio.
Furthermore, Brookfield expects to benefit from its ability to complete accretive acquisitions. The company has over $100 million worth of potential acquisitions currently under consideration. Brookfield and its partners recently agreed to acquire a 53% share in Neoen, which is developing renewable energy in rapidly growing markets such as France, Australia, and Nordic countries. Brookfield plans to acquire the remaining share in Neoen in the future.
Brookfield Renewable projects a 10% annual growth rate for its earnings for the next decade. This should enable it to increase its dividend, currently yielding 4.5%, by 5% to 9% annually. In total, Brookfield could produce exceptional returns over the next 10 years.
Rebounding with even more room for expansion
*Neha Chamaria(Brookfield Infrastructure):* Brookfield Infrastructure, the sister company to Brookfield Renewable, has experienced strong growth in recent months, as indicated by its stocks reaching their 52-week highs. Brookfield Infrastructure's corporate entity (BEPC), in particular, has almost caught up with units of the partnership (BEP) and has gained a substantial 42% in a year as of the current writing. The best part is that Brookfield Infrastructure is growing rapidly, as evidenced by its financials, which is why this supercharged stock could continue to climb even higher.
Brookfield Infrastructure's recently released third-quarter earnings report offers valuable insights into the company's operational performance and growth plans. During the first nine months of the year, the company increased its funds from operations (FFO) by nearly 10% to $1.8 billion. Brookfield Infrastructure generates consistent, contracted cash flows from the services it provides on its utility, transportation, midstream energy, and data infrastructure assets. Simultaneously, it regularly recycles capital and invests in growth, which contributes to FFO growth.
For a peek into the company's activities this year, Brookfield Infrastructure has smashed its 2024 $2 billion capital recycling goal through the offloading of well-established assets. Furthermore, the firm has been staying active, making strategic investments throughout the period. Some of their significant purchases consist of acquiring multiple North American data centers, securing 76,000 telecom tower sites in India, and grabbing a share in a Brazilian logistics company specializing in rail and ports.
Gunning for a 10% increase in FFO-per-unit and a 5% to 9% yearly boost in dividend per share, Brookfield Infrastructure is set to keep delivering impressive returns for shareholders in the foreseeable future.
Investors looking for opportunities beyond equities might consider exploring the world of finance and consider investing in companies like Cameco, given its significant potential in the nuclear power sector. If the trend towards nuclear power continues, Cameco could see further growth due to its status as one of the world's largest uranium miners.
Brookfield Renewable, on the other hand, has consistently shown impressive growth in its funds from operations (FFO) per share, making it an attractive investment option in the finance world. With a strong development pipeline and expected earnings growth, the company projects a 10% annual growth rate for its earnings over the next decade, potentially leading to exceptional returns for investors.
