1 Practically Perfect Canadian Stock Down 25% to Buy and Hold Forever

Brookfield Renewable Partners (TSX:BEP.UN) is one of the best renewable energy companies in the world. And right now, it is sitting about 25% below its all-time high. For long-term investors, that is an opportunity worth taking seriously.

BEP is a globally diversified, cash-generating giant with a track record of consistent growth and a management team that has delivered through multiple market cycles.

The pullback is not a sign of fundamental weakness but a chance to buy a compounding machine at a discount.

Why Brookfield Renewable is built to grow for decades

BEP owns and operates one of the world’s largest renewable power portfolios, spanning hydroelectric, wind, solar, and battery storage assets across more than 25 countries.

In Q1, the company posted record FFO (funds from operations) of US$375 million, or US$0.55 per unit, up 15% year over year. In the last 12 months, BEP increased FFO by 13% to US$1.394 billion.

The results were powered by standout performances across the board:

• The hydroelectric segment grew nearly 30% year over year.
• Wind and solar combined surged more than 60%.

BEP’s Q1 performance reflects the company’s ability to layer in new capacity from development, acquisitions, and capital recycling, and to translate it into growing cash flows.

BEP is a top TSX stock to own right now

BEP commissioned over nine gigawatts of new renewable capacity in the last 12 months, nearly double what it was delivering just two years ago. The company is on track to hit about 10 gigawatts per year by 2027, which should boost earnings growth.

BEP recently announced the privatization of Boralex, a leading Canadian renewable platform, at an implied enterprise value of $6.5 billion. This follows a consistent playbook: acquiring strong platforms such as Neoen, Deriva, and Scout, integrating them into BEP’s commercial and operational ecosystem, and driving superior returns.

Chief Investment Officer Jehangir Vevaina described the strategy plainly on the earnings call: leverage access to scale capital, enhance the platform, and create value that others can’t replicate.

BEP agreed to close or sell assets generating roughly US$2.8 billion in proceeds in Q1. One standout was the creation of Northview Energy, a private renewable vehicle seeded with 22 operating wind and solar assets in North America, generating US$1.3 billion in gross proceeds.

BEP has long-term power supply agreements with Microsoft and Google, and those frameworks continue to expand. According to Connor Teskey, BEP’s chief executive officer, power demand from hyperscalers is “higher today than it was last quarter” and is expected to keep climbing.

A strong balance sheet

While BEP is building aggressively, it is not taking reckless financial risks. The company ended Q1 with over US$4.7 billion in available liquidity.

It completed nearly US$4 billion in financings during the quarter, including a 30-year Canadian dollar note priced at the tightest spread in company history. The average maturity on corporate debt now sits at approximately 14 years, the longest in BEP’s history.

BEP also offers reliable distribution with a 5% to 9% annual growth target. Management has been explicit that any corporate restructuring being explored, which would consolidate BEP and BEPC into a single corporate security, would not change the distribution policy.

The bottom line is this: BEP is generating record cash flows, deploying capital into high-return opportunities at a pace it has never matched before, and doing so from the strongest balance sheet in its history.

Management expects to exceed its long-term 10% annual FFO per unit growth target in both the short and medium term.

For a stock sitting 25% below its peak, the risk/reward scenario here is hard to ignore.

The post 1 Practically Perfect Canadian Stock Down 25% to Buy and Hold Forever appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.