Innergex & TransAlta: 2 CleanTech Stocks as Canada Moves to Ban Single-Use Plastic

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Innergex & TransAlta: 2 CleanTech Stocks as Canada Moves to Ban Single-Use Plastic

 Innergex & TransAlta: 2 CleanTech Stocks as Canada Moves to Ban Single-Use Plastic

Summary

  • Only 9 per cent of the 3 million tons of plastic waste is recycled in Canada, shows government data.
  • It is estimated that approximately C$11 billion worth of plastic materials will be disposed each year by 2030, if no steps are taken.
  • The nation aims to achieve zero plastic waste by 2030.
  • Innergex Renewable Energy Inc. (TSX:INE) stocks have surged by over 55 per cent year-to-date.
  • TransAlta Renewables Inc. (TSX:RNW) stocks gained by 14.75 per cent YTD.

Canadian government plans to ban single-use plastic items such as checkout bags and takeout container and cutlery by 2021-end. These items make up most of the litter in the nation’s lakes, rivers and oceans. Under these circumstances, cleantech stocks such as Innergex Renewable Energy Inc. (TSX:INE) and TransAlta Renewables Inc. (TSX:RNW) have been gaining traction.

The ban will not affect medical items and personal protective equipment (PPE), made from single-use plastic, Environment Minister Jonathan Wilkinson informed. The government, however, has emphasized on proper disposal of PPE kits such as innovative recycling and solutions. 

Call to Clean Up Plastic Mess in Canada

Every year, Canadians throw away non-recyclable plastics worth C$8 billion. Up to 15 billion plastic bags are used and 640,000 tons of discarded fishing gear are thrown into the oceans annually, says official government data.

In the last 25 years, the Great Canadian Shoreline Cleanup program supported by the federal government helped remove over 1.3 million kilograms of single-use plastic trash from the country’s shores.

With companies treading the environmental consciousness and sustainability route, investors are equally conscious about investing in environmental, social, and corporate governance (ESG) stocks. The focus is now slowly shifting to the “triple bottom line” – the impact on finance, environment, and the society at large.

Keeping that in mind, here are two cleantech stocks in focus:

Innergex Renewable Energy Inc. (TSX:INE)

Current Stock Price: C$25.99

Renewable power producer Innergex owns and operates hydroelectric, wind and solar energy assets in Canada. Hydroelectric facilities account for most of power generated by the company.

The company recently entered into two 25-year long power-purchase agreements with Hawaiian Electric Company, Inc for solar and battery energy storage projects, which will be operational by 2023. The company also has presence in Chile, France, and the United States.

It owns a 68 MW solar farm in Chile and eight advanced development stage energy storage projects in France. In United States, the company own six wind farms in Idaho totaling 138 MW and 225.6 MW wind project in Texas. 

INE STOCK PERFORMANCE

The company has a current market capitalization of C$ 4.5 billion. Innergex stocks have surged by over 55 per cent year-to-date, from C$16.86 to the current C$25.99. The scrips have gained nearly 33 per cent in the last six-month period and up 35.71 per cent in the three months.  

As per data on the TSX, the company’s profit-to-book (P/B) ratio is 4.751 and profit-to-cash flow (P/CF) ratio is 19.40.

The company’s quarterly dividend pay-out has increased from C$0.175 as of 30 December 2019 to C$0.18 during the months. The stocks currently yield 2.77 per cent.

INE FINANCIAL HIGHLIGHTS

The company’s revenue in the second quarter 2020 ending June 30, 2020 went up four per cent year-over-year to C$1 50.5 million. During the six-month period ending June 30, 2020, the company’s revenues increased by 4 per cent to C$282.6 million.

The adjusted EBITDA was stable at C$105.3 million in 2019 and 2020. The operating expenses of the company increased from C$27.68 million in Q2 2019 to C$30.34 million in the latest quarter. The finance costs were down by 5 per cent to C$55.2 million in Q2 2020 while the depreciation and amortization shot up by 22 per cent to C$57.1 million.

The company reports net-loss from continuing operations of C$1.6million in Q2 2020, as compared to C$10.5 million in the same quarter last year. The cash flow from operation activities stood at C$73.47 million in Q2 2020, as compared to C$76.62 million in Q2 2019. The company ended the quarter with cash and cash equivalents of C$ 228.9 million in hand, as opposed to C$88.62 million a year ago.

 

TransAlta Renewables Inc. (TSX:RNW) 

Current Stock Price: C$17.81

TransAlta Renewables is a Canada-based electric utility company, operating energy generation and transmission facilities through wind, hydro, gas and solar business segments. It owns 19 wind farms, 13 hydro facilities, and one cogeneration gas facility.

RNW STOCK PERFORMANCE

The company has a current market capitalization of C$ 4.74 billion with a profit-to-equity ratio of 45.50, and earnings per share (EPS) of C$ 0.39. As per data on TSX, scrips gained by 14.75 per cent YTD. The profit-to-book (P/B) ratio is 2.193 and profit-to-cash flow ratio (P/CF) is 15.60. The company has a positive return on equity and return on assets at 4.66 per cent and 2.89 per cent, respectively.

The company distributed a monthly dividend of C$ 0.078 and at currently yields of 5.27 per cent. TSX data shows positive dividend growth rate over the three-year and five-year period at 1.75 and 2.87, respectively.

RNW FINANCIAL HIGHLIGHTS

Renewable energy production of the company increased to 1098 GWh in the second quarter of 2020 from 867 GWh a year ago.

As Covid-19 outbreak disrupted business activities across the globe, RNW revenues decreased to C$ 103 million in Q2 2020 from C$111 in the same quarter last year. The operating income also decreased to C$29 million in Q2 2020, as compared to C$39 million in Q2 2019. Net earnings showed a slight decrease from C$32 million in Q2 2019 to C$31 million in Q2 2020.

The cash flow from operating activities is C$52 million in Q2 2019 as compared to C$71 million in Q2 2020. The company ended the quarter with cash and cash equivalents of C$29 million and liquidity of C$498 million.

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