With more and more focus on climate change, renewable energy stocks have gained a lot of attention in recent years, especially in 2020 with most stocks in the space soaring.
Countries around the globe are committing to limiting and reducing their carbon emissions in the upcoming decades, thus, it should be a no-brainer that renewable energy stocks likely are a good long-term investment.
One company in this space that IPO’d in 2020 is Brookfield Renewable Corporation (NYSE: BEPC), which operates a broad range of energy projects such as hydropower (8 GW installed), solar (2,2 GW installed), wind (5,8 GW installed) and energy storage (2,7 GW installed) with $59 billion in assets currently under management.
Long-term power purchase agreements ensure stable cash-flow, which should continue to grow in the upcoming years as the company’s 27-gigawatt development pipeline come to fruition.
The stock also pays a really solid dividend close to 3%, so not only can you make a decent annual return via dividends but also via a strong directional move if you get the timing right.
The stock has taken a fair amount of beating since it’s ATH earlier this year, but following the 40% sell-off, price action is now suggesting that the stock is trying to put in a solid base and reversal pattern which should make it an interesting case for potential long-term investors.
Technical Analysis
After selling off more than 40% from it’s all-time-high in early 2021, the stock found support between $37 and $38.50.
After printing a double bottom, price action is suggesting a potential reversal/transition from bearish to bullish. Thus, we think now is a good opportunity to start building a position in this stock on pullbacks towards $37-$38.50, alternatively on a breakout above the resistance area of $43.50-$45.50.
Option Positioning
This is not a heavy stock in terms of option trading with only 2.5K (yes, K) calls and 2.7K puts. Over half of those options are expiring on the Sep op-ex, so am expecting a pullback. Low 40’s looks like a solid support area from option positioning.
FULL DISCLOSURE: Chris Capre currently has no stock or option position in BPCE. If you’d like to learn more about Chris’s trades and positions, you can get access via the Trading Masterclass where he shares his live trades, further investment ideas and daily market analysis.
