3 Reasons Brookfield Renewable Is The Best Utility You Can Buy For The New Year by Brad Thomas

in syndication •  8 months ago 


  • On Nov. 11 Brookfield announced it would be creating a Canadian c-Corp version of BEP that will trade on both the TSE and NYSE under the ticker BEPC.
  • The reason for this is to give Brookfield investors an alternative to its LPs for anyone who doesn't like K-1 tax forms.
  • US investors will face a 15% tax withholding in taxable accounts, due to a tax treaty between the US and Canada. Retirement accounts (like IRAs and 401Ks) have no withholding.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

This article was co-produced with Dividend Sensei and edited by Brad Thomas.

Buffett famously said that being "greedy when others are fearful" is the best way to make money over the long term. Despite what many investors think, the stock market is only rational over the long term, and in the short term can be hilariously and profitably wrong.

(Source: imgflip)

While it can sometimes take several years (seven is the most we've seen) for a company to return to fair value, it can often happen a lot faster.

BEP Since Dec. 24 Low

(Source: Ycharts)

Brookfield Renewable Partners (BEP) has been one of the hottest stocks on Wall Street since the lows of the last correction, tripling the broader market, and even outperforming dangerously overvalued Apple (AAPL).

BEP Total Return Since Our Last Article

(Source: Ycharts)

On Sept. 6 we published our last article on BEP, and it has beaten the broader market by 400% since then.

Many investors might assume that utilities are overvalued, and they'd be right. But assuming that BEP is now also overvalued would be incorrect because it began its epic rally from a 48% discount to 2019's fair value.

Today, there are three reasons that Brookfield Renewable remains the hands-down best utility you can buy for 2020, and far beyond. That includes not just a great recession-resistant asset base, quality management, and a still reasonable valuation, but also a realistic potential to deliver 15% CAGR total returns over the next five years.

BEP Total Returns Since 2004

...Originally Posted On Seeking Alpha

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This chart looks amazing, but overextended, can't buy at current prices, need to wait for a pull back first.