THE S&P500 might be approaching record highs, but 2023 hasn’t been kind to some stocks. While some stocks collapsed due to reasonable concerns, others were punished when they deserved better. Two of these stocks are Brookfield Renewable Energy (NYSE:BEPC) And Whirlwind (NYSE:WHR).
While one company continues to grow steadily and appears poised to deliver record numbers for fiscal 2023, the other is taking all the right steps to weather the tough times and become a stronger player in the industry. Here’s why you’ll want to buy them while they’re still each down more than 50% from their all-time highs.
It’s time to get greedy when the market is fearful
Néha Chamaria (Brookfield Renewable Energy): Shares of Brookfield Renewable have disappointed in 2023, generating barely a quarter of the S&P 500’s return over the year, as investors become wary of the company’s growth prospects amid rising interest rates. The renewable energy stock is now down nearly 54% from its all-time highs. This may sound scary, but for anyone looking for a value pick that also offers dividend growth, Brookfield Renewable stock is a great choice.
Certainly, Brookfield Renewable’s growth slowed somewhat in the third quarter, with its funds from operations (FFO) per unit, growing about 7% year over year. However, the company is confident of generating FFO growth of at least 10% in 2023 as it finalizes some imminent acquisitions in the fourth quarter.
This also means Brookfield Renewable could generate record results for 2023 despite market fears. The company also sees many opportunities to invest in growth through acquisitions, particularly in the current high interest rate environment where companies with large order books do not have access to the funds needed to expand these projects. Meanwhile, demand for renewable energy continues to rise. With a massive development pipeline of nearly 150 gigawatts, Brookfield Renewable is well positioned to benefit.
The company has consistently generated compound annual growth of 10% or more in FFO over the past decade, is confident of maintaining that rate through 2028, and aims to increase its dividends by 5% to 9% per year over the long term. term. This stock with a yield of 4.6% deserves your attention.
Whirlpool’s 6% dividend yield can’t be ignored
Lee Samaha (Whirlwind): It hasn’t been an easy year for appliance companies. Rising interest rates have dampened the housing market, and it’s no surprise to see Whirlpool shares down about 16% in 2023, as of this writing. It was a move that sent the stock tumbling more than 53% below its all-time high.
In addition to the slowdown in the housing market, Whirlpool has faced pressure on its margins due to rising raw material costs and continued pressure from many of the supply chain issues that have plagued manufacturers since the lockdowns. have had a negative impact on supply chains.
That said, management is not standing still. In fact, Whirlpool is responding to tough business conditions by cutting costs: management is targeting $800 million in 2023, with potentially more in 2024. Whirlpool also struck a deal to sell its Middle East and Africa operations to a company Turkish, Arcelik. .
Additionally, Whirlpool will bring its European appliance business to create a European-focused company with Arcelik, with Whirlpool acquiring a 25% stake in the new company. Arcelik will contribute its “household appliances, consumer electronics, air conditioning and small appliances activities,” according to the press release announcing the agreement.
All of this makes for a company in restructuring mode, and with management expecting $500 million in free cash flow this year, the plan to distribute $400 million in dividends to shareholders in 2023 seems easily achievable. Add in the possibility that lower interest rates will change conditions in its core North American market in 2024, and Whirlpool is a great option for investors willing to take a contrarian view.
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Lee Samaha has no position in any of the stocks mentioned. Néha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions with and recommends Brookfield Renewable. The Motley Fool has a disclosure policy.
2 stocks down more than 50% to buy now was originally published by The Motley Fool