Issue 43 – Opportunity Abounds in Renewable Energy

It would be an understatement to say that renewable energy stocks in Canada have felt the pain from eighteen months of central bankers aggressively raising interest rates. As interest rates rise, the widely held assumption is that the increased cost of financing new projects will prohibitively impact bottom lines. On top of rising rates, inflation, geopolitical stress, and market volatility continue to embolden the bearish camp. Renewable energy infrastructure companies are currently trading at absurdly low levels given that these companies are considered “defensive” given their low correlation to the broader market (i.e., lower Beta). In our view, “renewables” trading like “high beta” stocks makes little sense.

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By Charles Marleau CIM® and William Mitchell CIM®

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