Hi JJ,
We certainly like the space. The shift towards renewables is accelerating and renewable utility companies are well positioned to benefit.
Boralex has been a preferred name in this space for some time and is a pureplay renewable. However, its recent run-up has led to it being a little expensive. The company is now trading at 77 times forward earnings and at more than 4 times book value. Actually, no matter what valuation metric you look at, BLX is trading at a premium to its 5-year average. On top of this, recent industry buying pressure as also led to a red flag in terms of technicals - it has a 14-day rsi above 80. This is a sign that the company's stock price may be due for a short-term pullback.
Long-term, I don't think investors will be disappointed in an investment in Boralex. It has a strong asset base with 97% of capacity under long-term contracts with an average length of 13 years. It is targeting 2,800 MW of generating capacity in 2023, a 37% increase over the 2,040 it generate in 2019. EBITDA has grown at a CAGR of 25% and been one of the fastest growing renewable companies in the country.
Where it does fall a little short, is in terms of the dividend. The company's 1.67% yield is well below the industry average - in fact, it is the lowest yield in the utility space. Couple that with the fact it has a spotty history of dividend growth, it is less of an income play and more of a growth play. This is important to note, because most investors are attracted to utilities for the income they provide. Boralex is an outsider in this area.
Mat