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Rachna, a fresh pass-out from college, seeks a career prospect. Her widowed mother, Urmi, barely manages to run the household. Rahul, a seasoned business professional, enters their lives, and after that, the world appears more beautiful to them. Rachna marries Kabir, a mechanical engineer, against her wishes since her family is in some debt. With the help of her mentor, Rachna emerges clean from all her liabilities while maintaining an extremely low-key profile. Being submissive becomes her virtue. While all her contemporaries – friends, relatives, in-laws, and associates – remain spectators, Rachna rises to unprecedented heights showcasing her unique achievements. She is also nominated for the Nation’s top civilian award, but she politely turns down the offer. Only she knows the underlying factor in her journey from an unemployed girl to a high-net-worth individual has been her power of submission.
N Chandra, a professional aircraft engineer, and consultant, later turned into a content writer to document his over 25 years of work experience. His niche areas include, apart from aviation, other fields like energy, finance, personnel, and man-woman relationships. He has crafted several articles, non-fiction, and fiction work. He is more than willing to explore whatever storylines he stumbles upon. His results have been published on several blogs like NC Airways for the past ten years. He advises young adults and finances their projects where necessary on self-employment using their own skill sets from concepts to execution.
Renewable Energy Shows the Way to Make Money
Renewable energy stocks have teased investors with their promise for years. On the one hand, it’s easy to dream on the sector’s growth potential given the need to transition the global economy away from its current fossil fuel-based approach to a more sustainable one. According to one estimate, the world’s developed economies need to invest a staggering $10 trillion in the coming years to make the switch. However, despite all the investments in the sector, most clean energy stocks have significantly underperformed the market over the years.
Two factors have driven this underperformance: intense competition and weak financial profiles. With so many companies focused on doing the same thing, the industry has fought against itself for growth opportunities, which has hurt investment returns. Meanwhile, most clean energy companies focused on growing as fast as they could despite the lacklustre returns. As a result, many stretched themselves too thin, putting pressure on their balance sheets and stock prices and burning investors in the process.
A small group of renewable energy companies, however, have thrived despite the sector’s issues. That’s allowed them to consistently create value for their investors over the years.
One of the defining characteristics of these outperformers is that they aim to grow the value of their company, not just its size. Thus, those who want to invest in renewable energy stocks should seek out companies focused on this pursuit.
While many companies want to profit from the renewable energy sector’s growth potential, far fewer have a visible plan aimed first at increasing shareholder value. That makes them stand out as the top investment options in the space.
Image source: Getty Images.
The best renewable energy stocks to buy
Given the outsize growth potential of the renewable energy sector, most companies focused on the industry should be able to increase their revenue in the coming years. Far fewer will be able to expand their profitability, especially on a per-share basis due to competition and financial concerns.
The following four companies, however, have a plan to grow their earnings per share, which increases the probability that they’ll produce market-beating returns for their investors:
Best Renewable Energy Stocks to Buy
Future Growth Drivers
Brookfield Renewable Partners(NYSE:BEP)
Investing in hydropower, wind, and solar across the globe
Manufacturing utility-scale solar panels
Developing wind, solar, and energy storage projects in the U.S.
Acquiring wind and solar energy assets in North America and Western Europe
Data source: Company investor presentations.
Here’s a closer look at what makes them the top renewable stocks to buy for the long term.
Brookfield Renewable Partners: Focused on creating value
Brookfield Renewable Partners is one of the largest renewable energy companies in the world. It boasts a globally diversified, multi-technology renewable power platform that includes:
Hydroelectric generating facilities
Utility-scale solar projects
Distributed generation assets (i.e., the energy produced near where it’s used, such as rooftop solar)
As of August 2019, hydro made up 75% of the company’s portfolio followed by wind at 21% and solar at 4%.
Brookfield makes money by selling the bulk of the renewable energy it generates to customers like utilities under long-term, fixed-rate power purchase agreements (PPAs). These contracts provide the company with predictable cash flow while insulating it from volatile power prices. The company typically distributes the bulk of its cash flow (80% on average) back to investors via a high-yield dividend. It reinvests the rest into the building or buying additional renewable energy-generating assets.
The company has a high hurdle rate for new investments, targeting opportunities that will generate 12% to 15% total returns over the long-term. It’s able to achieve this goal by investing on a value basis, leveraging its operational expertise, and remaining disciplined. Brookfield typically targets opportunities where it can buy underperforming assets and turn them around by improving their operations and cost structure.
Brookfield’s focus on improving is evident in its long-term outlook. The company aims to grow its cash flow per share at a 6% to 11% annual rate through at least 2022, which should allow it to increase its dividend at a 5% to 9% yearly pace. One factor powering that plan is the company’s ability to improve the profitability of its existing assets. That factor alone should supply it with half of its cash flow growth over that time frame. The other half will come from building new renewable projects that meet the high bar it’s set for investment return.
The company’s value-focused approach has paid big dividends over the years. In the two decades since its inception through mid-2019, Brookfield has generated a 16% annualized total return. For comparison’s sake, the S&P 500 only delivered a 7% total annualized return over that time frame.
If there’s one concern with Brookfield Renewable, it’s that some of its operations reside in economically sensitive countries like Brazil. The company takes steps to reduce its risks in those regions by using hedging contracts to lock in currency rates and power prices. However, a prolonged economic slump could negatively impact its earnings and weigh on its market value.
While Brookfield Renewable Partners has battled its share of ups and downs over the years, it has proven that slow and steady can win the race. The company has consistently grown its cash flow by investing in opportunities that meet its strict criteria. That’s enabled it to routinely increase its distribution to investors, allowing them to collect a growing income stream. That trend isn’t showing any signs of stopping, which is why Brookfield Renewable is a great clean energy stock to buy for the long term.
Image source: Getty Images.
First Solar: A premier solar panel maker
First Solar is a solar panel manufacturer. However, it differentiates itself from most competitors in two ways.
First, the company develops and manufactures thin-film modules that use cadmium telluride as a semiconductor instead of the conventional crystalline silicon technology. While these panels aren’t as efficient in converting the sun’s rays into electricity, they have a lower cost per watt.
First Solar offsets some of the efficiency loss by making larger panels compared to those produced by its competitors. On the one hand, this makes them less suitable for residential rooftops. However, they’re ideal for utility-scale projects that connect to the grid since it doesn’t have to install as many panels per project to produce the same amount of power. Consequently, First Solar has developed and operates many of the world’s largest grid-connected solar power plants.
Secondly, First Solar’s history of innovation sets it apart from the competition. While many rivals focus on manufacturing low-cost silicon-based panels, First Solar invests industry-leading amounts of capital into developing more efficient thin-film solar panels. Its more-innovative products carry higher margins, which enables it to make more money. In 2018, it launched its latest innovative product, the Series 6 module, which is even more efficient than the Series 4 panel it’s replacing. The company decided to completely skip the launch of the Series 5 module and accelerate the migration to the larger Series 6 because it was more cost-competitive with rival panels.
The company invested more than $1 billion into Series 6, which included research and development (R&D) costs, as well as building out manufacturing capacity in the U.S. and Asia. That investment should start paying off in 2019. Its earnings are on track to surge more than 80% year over year at the midpoint of its forecast. That accelerated earnings-per-share growth should continue in the years that follow as it cashes in on its investment in the Series 6 module.
Despite its massive investments in R&D, First Solar has managed to maintain one of the best balance sheets in the solar sector. The company expects to end 2019 with between $1.7 billion and $1.9 billion of net cash. That cash-rich balance sheet gives it an unmatched competitive advantage versus its financially weaker peers, most of which are weighed down by a mountain of expansion-fueled debt. First Solar, on the other hand, has the unparalleled financial flexibility to continue investing to increase its capacity as well as on its next innovation.
While First Solar is a top-tier solar panel manufacturer, it operates in a highly competitive industry. Because of that, the company needs to continue pouring money into R&D so that it doesn’t lose its competitive edge. If it fails to innovate, it might start falling behind. It also needs to battle against rising costs and falling panel prices by keeping its expenses at bay to protect its profit margins.
In spite of those risks, First Solar appears well-positioned to prosper thanks to its strong balance sheet, healthy earnings growth prospects, and a history of innovation. That combination should give it the power to generate market-beating returns in the coming years.
NextEra Energy: A history of outperformance and a plan to continue
NextEra Energy is a clean energy-focused company. It operates two distinct businesses:
Government-regulated utilities (Florida Power & Light and Gulf Power)
A competitive energy business (NextEra Energy Resources) that generates electricity and sells it to third parties under long-term PPAs
NextEra Energy’s affiliates combine to generate more electricity from the wind and sun than any other company in the world. In addition, it’s a leader in battery storage.
The company’s regulated utilities produce energy from a variety of sources (including natural gas, nuclear, coal, and solar) and distribute it as well as natural gas to customers. These businesses generate relatively predictable income since regulatory bodies set rates and demand tends to increase at a steady pace as Florida’s population and economy expand.
NextEra’s energy resources segment owns an extensive portfolio of power-generating facilities including wind, solar, nuclear, natural gas, and oil. In addition to that, the company operates a meaningful natural gas pipeline business. The company sells the power it produces under long-term PPAs and leases capacity on its gas pipelines via long-term contracts. Those agreements enable NextEra to churn out predictable cash flow.
NextEra has a long history of creating value for investors by consistently growing its earnings and dividend. From 2003 through 2018, the company increased its adjusted earnings per share at a 7.8% compounded annual rate while boosting the shareholder payout at a 9.1% yearly pace. That consistent growth has enabled the utility to generate market-crushing returns. In the decade from 2008 through 2018, it produced a 380% total return, which outpaced not only its utility peers (170% total return over that time frame) but also the S&P 500 (243%).
The utility firmly believes it can continue to grow earnings at a healthy clip in the coming years. Powering NextEra’s forecast is a massive backlog of expansion projects. The company expects to invest from $23 billion to $25 billion in Florida Power & Light from 2019 to 2022 and another $2.9 billion to $3.3 billion in Gulf Power on a variety of projects, including new solar capacity. It has lined up $25 billion to $28 billion of investments at energy resources, mainly on renewables. The company currently expects to build 11.7 GW of renewable projects over that time frame. That would boost its industry-leading portfolio, which consisted of 18 GW of wind and solar capacity in August 2019.
While NextEra Energy has a strong balance sheet, it will be investing a significant amount of money in expanding its operations over the next several years. At the same time, it plans to continue increasing its above-average dividend. That will be a tough balancing act. The company will likely need to secure substantial amounts of outside funding to bridge the gap, including selling assets to its MLP NextEra Energy Partners. If it runs into trouble obtaining financing, then it might not grow its earnings at as fast as it expects.
The company, however, does have a long history of being able to finance its growth while increasing the dividend. That’s why it firmly believes it can deliver on its growth plan. That outlook would see earnings per share expand at a 6% to 8% compound annual rate through at least 2022 from 2018’s base. The company also expects to receive an additional earnings boost in 2020 and 2021 from the integration of its acquisition of Gulf Power as its cost-saving initiatives start paying off. That would enable NextEra to continue to increase its dividend at a healthy rate during that period, which should give it the power to keep producing market-beating total returns.
Image source: Getty Images.
TerraForm Power: Value creators are now in charge
TerraForm Power focuses on owning and operating wind and solar power assets in North America and Western Europe. As of the middle of 2019, 64% of the company’s portfolio consisted of wind assets, while the rest was solar.
Like Brookfield Renewable, TerraForm Power makes money by selling the electricity it generates to end-users under long-term PPAs. Those contracts provide it with predictable cash flow, most of which (its payout ratio typically ranges between 80% to 85%) it returns to investors via a high-yield dividend. The company reinvests the remaining cash flow on high-return projects that expand its renewable power generating capacity. For example, it has three projects underway to upgrade some of its existing wind farms by installing newer, larger turbines that it hopes to complete by 2021. These investments would boost the power output at those locations by 25% to 30% at a 40% discount on the cost of building new wind farms. That enables TerraForm to boost its per-share earnings without making a substantial investment.
Aside from a similar business model, another reason TerraForm Power has so much in common with Brookfield Renewable is that they have the same parent in Brookfield Asset Management (NYSE:BAM). Brookfield Asset and Brookfield Renewable joined forces in 2017 to take control of TerraForm Power after its former parent went bankrupt. They’ve since helped TerraForm get its financials back on solid ground while improving its operational focus and reducing costs. These factors have helped boost the profitability of TerraForm’s legacy assets while giving it the financial flexibility to acquire new ones.
TerraForm made two major acquisitions in the first two years since Brookfield took control. Those transactions will provide the company with enough power to increase its dividend at a 5% to 8% annual rate through 2022. One of the main drivers of this growth is TerraForm’s ability to improve the profitability of the assets it acquired by reducing costs.
Like many renewable energy companies, TerraForm Power has struggled to create value for investors in the past. Before Brookfield took over, the company’s total return was a negative 50%. Those value-destroying ways, however, have changed since it began implementing Brookfield’s game plan. In the first 22 months after Brookfield took control, TerraForm generated a nearly 44% total return, which obliterated the S&P 500’s 17% total return over that timeframe.
While the Brookfield-led turnaround has been highly successful, TerraForm Power is still dealing with some of the lingering effects of its former parent. The biggest concern is its balance sheet, which remains loaded with debt. Because of that, the company’s credit rating is below investment grade, which makes it harder and more expensive to borrow money. The company is working to address that issue by selling non-core assets and boosting its profitability.
As TerraForm’s financial profile improves, it will enhance the company’s ability to grow cash flow per share. That will increase the probability of achieving its dividend growth plan. Its new focus on creating shareholder value should give it the power to continue to outperform.
Focused on growing what matters most to investors
Regardless of its promise, the renewable energy sector has burned investors in the past due to intense competition and aggressive growth. Many companies have struggled to make money, with some having to declare bankruptcy.
The sector, however, is beginning to learn from those growing pains as well as from the companies that succeeded where others failed. Because of that, the renewable energy industry appears to have brighter days ahead, especially as climate change concerns heat up. While many companies could prosper in the coming years, these four have a long-term growth strategy aimed at increasing their earnings per share. That improves the probability that they can create value for shareholders, which makes them the best stocks in the sector to buy in the renewable energy sector.
Thomas Cook Collapsed, Other European Airlines on Brink
A sad story of Thomas Cook: being reported only for the sake of reporting.
Its official now. By 23 September 2019, the 178-year-old company, Thomas Cook (TCG.L) along with a trio of subsidiary airlines has collapsed. Its stores across Northamptonshire have shut their doors. Thomas Cook branches in Weston Favell and Northampton’s Abington Street have also closed for good. Two travel stores in Kettering in Lower Street and at Asda, stores in Wellingborough’s Swansgate Centre and Corporation Street in Corby have also closed.
Hitherto known as a travel giant, its thousands of employees have been rendered jobless. This includes about 1,000 workers at their nearby Peterborough HQ.
Today, the grand old travel firm finds itself being put into compulsory liquidation. A weekend of frantic talks could not save Thomas Cook. Tens of thousands of its holidaymakers have been left in the lurch around the globe.
The closure of Thomas Cook and the subsequent cancellation of all its flights has forced the launch of an operation by the Government and the Civil Aviation Authority (CAA). It is one of the largest repatriation in recent British history. This has been codenamed Operation Matterhorn.
This repatriation is hugely complex and the CAA and the government are working around the clock to support the Thomas Cook customers. All such passengers currently overseas who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date by providing new flights to return to the UK.
A CAA spokesman clarified:
“The Government and the Civil Aviation Authority are now working together to do everything we can to support passengers due to fly back to the UK with Thomas Cook between September 23 and October 6. Depending on your location, this will be either on CAA-operated flights or by using existing flights with other airlines.
If you are already abroad you will find all the information you need about your arrangements to get home on this website. If you are due to depart from a UK airport with Thomas Cook Airlines, please do not travel to your UK airport as your flight will not be operating and you will not be able to travel.
These repatriation flights will only be operating for the next two weeks (until October 6). After this date you will have to make your own travel arrangements. From a small number of locations, passengers will have to book their own return flights.”
Virgin Atlantic is one of the airlines taking part in the CAA scheme. A Virgin Atlantic spokesperson stated: “We’re sorry to learn that Thomas Cook has ceased trading earlier today and recognise the impact on its customers and staff in the UK and abroad. Virgin Atlantic is working closely with the CAA to repatriate Thomas Cook customers impacted in Cuba, Jamaica and the United States, to ensure they will be able to complete their journey as planned. We have allocated available space on our scheduled flights, and are also providing special flights to repatriate Thomas Cook passengers abroad.”
Similarly, a representative for the easyJet airline stated: “We are sorry to see the news about Thomas Cook and appreciate the anxiety that their customers will be facing now. easyJet is working with the CAA to provide a fully crewed A320 aircraft to support the repatriation efforts over the coming days.”
Besides, British Airways is also offering flights for Thomas Cook passengers returning to the UK from destinations like New York, Los Angeles, San Francisco, Las Vegas, and Cancun.
Aviation analysts observe that the strains that sank Thomas Cook weigh on other European airlines as well. Several such companies are struggling with similar problems.
Two small operators, Aigle Azur and XL Airways, are before the French bankruptcy courts today. The list of similar bankruptcies is long: Monarch, Air Berlin and Alitalia failed in 2017, Primera and Cobalt in 2018, and Germania, Flybmi and Iceland’s WOW so far in 2019.
Today in aviation sector, there is very little left for cheer. Larger European carriers are not immune from the threat of collapse. Regional operator Flybe’s sale to a Virgin Atlantic-led consortium just managed to avoid its closure. Third-ranked low-cost operator Norwegian Air (NWC.OL), which has bled cash while making inroads in the transatlantic market, somehow managed to get a reprieve from creditors last week, postponing repayment on $380 million in debt for up to two years.
Jet Airways pushed further to the brink of collapse
India’s beleaguered Jet Airways said on Thursday 10 more of its planes had been grounded over unpaid dues to leasing companies, pushing it further to the brink of collapse and jeopardising hopes of a new investor rescuing the carrier.
Jet had already been forced by lessors to ground more than 80 percent of its fleet. It said it had cancelled all west-bound overseas long-haul flights until tomorrow morning.
With the fresh groundings on Thursday observers peg the size of Jet’s operational fleet at about 12 planes or so. At one time, Jet used to have 120 airplanes at its disposal. That is history now.
If the size of its operational fleet drops below the 20 mark, Jet may be forced to halt all international operations, as Indian regulations demand that any domestic carrier has to have at least 20 operational aircraft in order to fly overseas.
Jet’s lenders are still trying to seek expressions of interest in the debt-laden carrier from potential investors interested in rescuing the 25-year old airline.
The lenders have so far not put in their own money. Even they doubt the feasibility of such act. Lenders, led by State Bank of India (SBI), want a new investor to acquire a stake of up to 75 percent in the airline. Initial bids were to be submitted by the end of Wednesday, but SBI extended the deadline on Wednesday to Friday. The lenders seem to have received four expressions of interest in the airline. It is not clear though, whether any of these will translate into bids and whether an investor will be identified in time to who could turn around the carrier.
Jet did not get a loan of about $217 million from its lenders as part of a rescue deal agreed in late March. Many of the lessors first repossessed the planes. Eventually, they have begun to de-register these planes, further eroding value in the airline. All through this processes, the lenders remained mute spectators. They could have prevented it.
Once a plane is de-registered, the lessor can take it out of the country and lease it to other airlines.
Some fuel suppliers have also begun to tighten their fuel supply terms to the embattled carrier, piling additional pressure on Jet.
The airline, once India’s leading private carrier, has been forced in recent months to cancel hundreds of flights to dozens of destinations both in India and overseas, leading to a customer backlash and a steady slide in its market share.
India head to the polls with PM Modi the front runner
India’s Prime Minister Narendra Modi addresses an election campaign rally
Tens of millions of Indians will begin voting on Thursday to cast their ballots in the first phase of a mammoth general election at which Prime Minister Narendra Modi is seen as the front-runner, campaigning on his national security record.
Voting in the first of seven rounds will be held in 91 constituencies across 20 states and federally-administered regions, amid tightened security, stepped up after violence killed seven people on Tuesday.
Pollsters say Modi’s ruling nationalist Bharatiya Janata Party (BJP) has been riding high on his tough stance against Pakistan, after aerial clashes between the hostile neighbors followed a February attack by JeM owned the responsibility of killing 40 Indian security personnel in Pulwama.
But the main opposition Congress party, which wrested three major farming states from the BJP in December by promising to waive the outstanding loans of distressed farmers, sought to corner the government on a lack of jobs and weak farm prices.
The election was open but in favor of Modi’s coalition, said most poll observers. “The gap between Congress and the BJP is still enormous, so no one is seriously thinking that Congress is going to fill that gap. The opposition landscape remains heavily fragmented.”
The alliance led by Modi’s BJP is poised to win a narrow majority of 273 of the 543 seats at stake, an average of four opinion polls showed.
In the 2014 general election, the party won a landslide 282 seats, securing a clear majority for the first time in decades and raising hopes of economic reform after a period of sluggish growth.
In the northern state of Uttar Pradesh, which sends more lawmakers to parliament than any other, Amit Kumar, who runs a auto rikshaw, said he voted for the BJP in 2014, when Hindu-Muslims riots in the area killed at least 65 people, and would do so again.
“But jobs are a problem here,” he said, echoing government and private statistics here that show Modi’s government has failed to create enough jobs for the burgeoning workforce in a population of 1.3 billion.
More than 142 million Indians are eligible to vote in the first phase, of a total of 898.9 million. Votes in the seven rounds, spread over 39 days, will be counted on May 23.
From sugar farmers in northern India going unpaid for produce, to small businesses in the south shut because they are unable to meet the requirements of a new, unifying national tax, discontent over the economy has brewed for months.
Congress, which won only 44 seats last time around, is betting a promise of monthly handouts of Rs 6,000 for the poorest families will boost its performance now.
It hopes to win enough seats to lure regional parties opposed to Modi to back it after the election and form the government.
India begins de-registeration of Jet Airways planes
The crisis ridden airline of India – Jet Airways – could not manage its survival. It could neither pay off its dues to its lenders nor it could pay the lease to its lessors. Against such a backdrop, even a miracle can’t help Jet Airways.
India’s Directorate General of Civil Aviation (DGCA) has processed the deregistration of seven Boeing 737-800s, while it has received requests to deregister 13 more aircraft.
The deregistered aircraft correspond to two 737s managed by Avolon and five from MC Aviation Partners for which requests were made last week.
Nitin Sarin, managing partner at Indian law firm Sarin & Co, tells FlightGlobal that although the deregistration has been processed, there are still a number of steps involved before lessors can export their aircraft.
“The government agencies/airport operators are to send in their dues within a stipulated period of time, after which the lessor is to pay, on payment the DGCA shall give its permission to export and thereafter the lessor may export. These stages after deregistration are still pending,” he says.
Requests to deregister a further 11 737-800s and two -700s were lodged on 9 April by lessors Avolon, Aviation Capital Group and BBAM.
Earlier this week, Aergo Capital lodged requests to deregister seven ATR 72-500s operated by Jet Airways, and further requests appear likely.