Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 27 Jan, 25 | INE | Speculative Buy | CAD 7.61 | CAD 8.447 | CAD 8.954 | 27 days | 17.7% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Innergex Renewable Energy Inc. operates as an independent renewable power producer in Canada, the United States, France, and Chile. It acquires, owns, develops, and operates renewable power-generating and energy storage facilities primarily in hydroelectric, wind, and solar power sectors. The company operates through three segments: Hydroelectric Power Generation, Wind Power Generation, and Solar Power Generation. As of February 21, 2024, it owned and operated 87 facilities with a net installed capacity of 3,600 megawatts, including 41 hydroelectric facilities, 35 wind facilities, 9 solar facilities, and 2 battery energy storage facilities. The company is headquartered in Longueuil, Canada.
Higher Gross Margin
77.1% in Q3 2024 vs 61.1% of Industry Median
Higher EBITDA Margin
66.1% in Q3 2024 vs 54.2% of Industry Median
Higher Debt to Equity Ratio:
7.11x in Q3 2024 vs 1.86x of Industry Median
Lower Current Ratio:
0.56x in Q3 2024 vs 1.00x of Industry Median
Volatility in the price , regulatory risks, inflationary pressures, forex headwinds, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 7.61 | 6.4 | 8.447 | 8.954 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Advancing its projects under construction: The company continues to advance its projects under construction. In the quarter, they completed the wind turbines installation at the Boswell Springs wind project and have advanced commissioning. The generation-tie line is almost completed. Construction activities continue to progress at the Hale Kuawehi solar and battery energy storage project in Hawaii also where the switchyard construction was completed and more than 90% of photovoltaic solar panel arrays are done.
Decent cash from operations: The company's cash flows from operating activities in Q3 2024 totaled CAD 109.5 million, compared to CAD 103 .0 million in the same period last year. Moreover, its free cash flow for the trailing twelve months ended September 30, 2024 increased to CAD 260.9 million, compared with CAD 121.2 million for the corresponding period last year.
An income Play: The dividend pay-out practice translates into an essential factor for regular income-seeking investors with a long-term horizon. Recently the company paid a quarterly dividend of CAD 0.09 per share, on January 15, 2025. Moreover, at the last closing price of CAD 7.60 as on January 23, 2025, the stock offered a healthy dividend yield of 4.82%, which looks decent considering the current macros and interest rates.
Considering the expected valuation upside, advancing under construction projects, decent cash from operations, an income play, healthy guidance, current trading levels and key business risks a ‘Speculative Buy’ recommendation has been given on the stock at the last closing price of CAD 7.61, as on January 24, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Utilities Industry: Utilities - Renewable
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| INE Innergex Renewable Energy Inc. |
- -% | 13.53 | - | 56.50 | 1.79 | 2.03 | 8.63 | 15.06 |
| BEPC Brookfield Renewable Corp |
0.66 1.64% | 40.83 | - | 15.17 | 1.66 | 1.16 | 4.45 | 10.75 |
| AQN Algonquin Power & Utilities Corp |
-0.035 0.47% | 7.36 | 9.12 | 16.26 | 1.96 | 0.79 | 4.32 | 9.44 |
| NPI Northland Power Inc. |
-0.02 0.10% | 19.65 | 84.21 | 16.64 | 2.15 | 1.26 | 5.05 | 9.27 |
| BLX Boralex Inc |
-0.41 1.42% | 28.51 | 35.46 | 27.47 | 3.53 | 2.01 | 6.80 | 10.90 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 24, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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