Cameco or Brookfield Renewable, Which One Is the Better Renewable Energy Stock?

Published on: May 27, 2024
Author: Caroline Kong

Renewable energy stocks on the Toronto Stock Exchange have shown signs of recovery recently, take Cameco (TSX:CCO) and Brookfield Renewable Partners (TSX:BEP.UN) as examples. Cameco stock has risen even as other renewable energy companies see their prices slump, while Brookfield Renewable shares have risen a strong 35% in the past few months.

Pros and Cons of Buying Cameco Stock

There are a number of reasons to invest in Cameco stock, starting with the fact that nuclear energy has been identified as the key to the transition to a low-carbon future, and Cameco is one of the largest uranium producers, with a solid market position and a significant amount of experience providing a competitive advantage.

Cameco also has a strong balance sheet and a prudent financial management system that is capable of navigating the cyclical fluctuations in the uranium market.

The company has worked hard to maintain liquidity and control costs effectively, and with the completion of the acquisition of Westinghouse, is able to remain financially flexible in the coming years. Investors are cautioned that concerns about nuclear accidents and radioactive waste disposal may deter some investors. It could even cause Cameco shares to turn downward overnight. Changes in public opinion or environmental campaigns can also have a significant impact on the nuclear industry.

In addition, the price of uranium is volatile, and Cameco’s financial performance is closely tied to the price of uranium, which could lead to fluctuations in the company’s revenues and profits, posing a risk to investors.

Investing in Brookfield Renewable Partners Stock

Brookfield Renewable stock’s recent rise is thanks to the company’s record first-quarter earnings. It shows that the company’s funds from operations (FFO) reached $296 million, up 8% year-over-year. The company now has $4.4 billion in available liquidity and has also successfully closed nearly $6 billion in financing, demonstrating investor confidence in its business strategy.

In addition, management has set a dividend growth target averaging 5-9% per year, bolstering investor confidence in the company’s long-term prospects and revenue potential. Although the share price has risen significantly, investors can still look forward to further performance of the company’s stock.

Brookfield Renewable has set a target to add approximately 7,000 megawatts (MW) of new renewable energy generating capacity during the year. And asset recovery activities are expected to generate $3 billion in proceeds, further strengthening the financial position.

The groundbreaking agreement with Microsoft to provide more than 10.5 gigawatts of additional renewable energy to support the growth of Microsoft’s data centres and artificial intelligence-driven cloud services business not only validates Brookfield’s capabilities as a renewable energy company, but also opens up significant revenue opportunities for the future.

If you’re considering buying a TSX renewable energy stock, Brookfield Renewable is worth considering, especially since the stock is now yielding a 5.1% dividend.

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