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Summary
- Forced to confront climate change, biodiversity losses, and dampening outlook of oil & gas sector, Canada is already trying to reduce its economic dependence on fossil fuels.
- The federal government has diverted billions towards the cleantech companies.
- Facedrive and GreenPower Motor are two ESG stocks currently listed on the Toronto Stock Exchange Venture.
The COVID-19 pandemic and the continued volatility in commodity prices are acting as a long-term catalyst for Canada’s renewable energy sector. The entire chain of events in 2020 has led to a rise in ESG (environmental, social and governance) investments. Forced to confront climate change and biodiversity losses, and the dampening outlook of the oil and gas sector, Canada is already trying to reduce its economic dependence on fossil fuels. The federal government has diverted billions towards clean energy. Canadian energy firms that have started an arduous recovery path after facing a battering at the start of the year have earmarked funds for green energy and storage technologies. A handful companies such as Facedrive (TSXV:FD) and GreenPower Motor (TSXV:GPV) are being touted as upcoming ESG stocks to watch out for.
In the market’s gradual transition to sustainability and clean energy, future growth opportunities lie in ESG. The socially responsible investing (SRI) market is estimated to be worth US$ 23 trillion globally, according to a study by JP Morgan. As ESG becomes central to investing, markets are likely to embrace the sustainability angle and the intensity of capital inflow will get bigger.
As more and more ESG-focused indices come to the fore in the equity markets, we look at two such ESG stocks on the Toronto Stock Exchange Venture (TSXV).
Facedrive Inc (TSXV:FD)
Sector: Technology
Industry: Software
Facedrive stocks have returned a whopping 1245+ per cent since the company’s stock market debut in June 2018.
Stocks of the ridesharing company have advanced by a remarkable 450+ per cent year-to-date, despite the strict restrictions on the movement of taxis amid the pandemic. The company has gained over 320 per cent in six months. However, the scrips have declined by 17 per cent in the last one month.
Facedrive ranks at the top spot on TSX’s Junior Tech stocklist, which is a list of microcap and smallcap technology companies.
This tech company’s stock is currently trading at C$ 12.79. The company has a market capitalization of C$ 1.15 billion and its price-to-book (P/B) ratio is 255.8, according to data on TSX.
Facedrive has expanded into various new segments. One of them is called Facedrive Rideshare. The feature offers green transportation solutions. Another one is Facedrive Foods that delivers food to consumers’ doorsteps. The company also has an ecommerce platform called Facedrive Marketplace. Then there is Facedrive Health that offers technological solutions to healthcare challenges.
In its quarter ending March 31, 2020, the company posted C$ 0.39 million in revenues, up from just C$ 36,027 in the same period last year. However, its operating losses grew to C$ 1.62 million in the latest quarter, up from C$ 0.83 million on March 31, 2019.
GreenPower Motor Company Inc (TSXV:GPV)
Sector: Consumer Cyclical
Industry: Vehicles & Parts
Next on our list of ESG stocks is Canada-based electronic vehicle (EV) maker. The stocks of GreenPower Motor escaped the wrath of the coronavirus pandemic, surging by over 760+ per cent year-to-date (YTD).
Shares of the heavy-duty electric-vehicle manufacturer have gained over 230 per cent in the last three months. However, the scrips are down five per cent in the last one month.
GreenPower focuses on the North American markets. It manufactures high-floor and low-floor vehicles, including transit and school buses, double-deckers, shuttles, and cargo vans. Its flagship product is called EV Star.
GreenPower ranks wells on two TSX stocklist – Rising Star (a list of TSX Venture companies outperforming the market) and Junior Consumer Goods (a list top performing of micro and smallcap consumer goods companies).
The company is currently trading at C$ 17 and has a current market capitalization of C$ 321 million. According to data on the TSX, GreenPower has a current price-to-cash flow ratio of 9.30. However, the stock’s P/B ratio is negative 100.0.
GreenPower Motor’s revenue for the first quarter fiscal year 2021 (ending June 30, 2020) was US$ $13.5 million, up 122 per cent year-over-year. It generated gross profits of US$ 0.618 million. The company ended the year with an inventory of US$ 6.6 million and US$ 0.45 million cash and restricted cash in hand.
GreenPower recently announced the closure of its US initial public offering (IPO), raising US$ 37.2 billion in gross proceeds.
