As we usher in 2021 and say goodbye to 2020, investors are getting ready to figure out the best strategy to outperform in the new years. Given rich valuations and the potential for economic growth to be strong, investors might want to focus on risk-management especially with growth stocks.
When economic growth is accelerating, value stocks tend to outperform growth. Rising rates also lead to multiple contractions. This doesn’t mean that all growth stocks won’t do well, it just means the environment is going to be more challenging.
Brookfield Infrastructure Partners (BIP), Clearway Energy, Inc. (CWEN), and Brightcove, Inc. (BCOV) are three such companies that look positioned to do well in 2021. These companies belong to different industries but are positioned for a massive uptrend. CWEN operates in the renewable energy space with a high-dividend potential, while BCOV, a leading digital video distribution platform has seen its stock doubling in 2020. At the same time, BIP is one of the top infrastructure companies that has generated strong cash flows from acquired assets.
Brookfield Infrastructure Partners (BIP)
BIP is involved in operating utilities, transport, energy, data infrastructure, and businesses in Europe, North and South America, and the Asia Pacific. The utility segment operates nearly 2,000 kilometers of natural gas transportation pipelines in Rio de Janeiro, São Paulo, and Minas Gerais. The company’s Transport segment offers transportation and storage services for freight, bulk commodities, and passengers.
BIP announced the appointment of David Krant as its Chief Financial Officer, effective March 1st, 2021. Krant has been with the Brookfield organization since 2012 and he has performed several critical roles in a finance and operations capacity during this period.
During the three months ended September 2020, Funds from Operation (FFO) jumped 8% year-over-year to $365 million, led by a 38% growth in the Data Infrastructure, and Transport segment. Net income per unit climbed to 8.2% year-over-year to $0.79. In August, BIP closed the acquisition of 135,000 operational telecom towers from India’s Reliance Jio.
The company further indicated that it wants to expand its global data transmission and distribution portfolio to enhance its FFO. Strong performance at BIP’s North American residential infrastructure business added 58,000 annuity-based rental contracts and drove the Energy sector higher.
Consensus revenue estimate for the quarter ending December 2020 is $1.1 billion, indicating a 33.1% year-over-year growth. EPS is likely to surge 328.6% to $0.16.
On a year-to-date basis, BIP rose 10.5% to end yesterday’s trading session at $49.73. Over the past six months, the stock surged 21%.
How does BIP stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Overall POWR Rating.
The stock is currently ranked #4 of 18 stocks in the MLPs – Other Industry.
Clearway Energy (CWEN)
CWEN is involved in the acquisition and contraction of renewable energy as well as conventional and thermal infrastructure assets in the United States. The company’s contracted generation portfolio stands at 7,000 megawatts (MWs) of wind, natural gas, and solar-powered generation facilities. It also has district energy systems. Its thermal infrastructure has aggregate steam and chilled water capacity of 1,530 net MW thermal equivalent.
CWEN signed agreements with Clearway Group (CEG) for CWEN’s co-investment in a 1,204 MW portfolio of renewable energy projects developed by CEG consisting of (i) 1,012 MW from five geographically diversified wind, solar, and solar plus storage assets under development and (ii) the 192 MW Rosamond Central solar project which is expected to commence operations by the end of the year.
During the three months ended September 2020, CWEN’s operating revenue climbed 12.2% year-over-year to $332 million. EPS dropped to $0.27 from $0.36 posted in the same period last year. At the end of the quarter, Cash Available for Distribution (CAFD) was $171 million. The Company indicated that it is committed to meet its long term 5-8% annual dividend growth target.
CWEN soared 61.5% year-to-date to close at $32.13 in yesterday’s trading session. During the past six months, the stock jumped 39.3%.
It is no surprise that CWEN is rated “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, Industry Rank, and Peer Grade. It is currently ranked #3 of 63 stocks in the Utilities – Domestic Industry.
Brightcove, Inc. (BCOV)
BCOV is a digital video distribution company with its flagship product Video Cloud, an online video platform. This product enables its customers to publish and distribute video to Internet-connected devices. BCOV also offers Video Marketing Suite, a suite of video technologies to drive awareness, engagement, and conversion. Amid rising demand for digital videos, BCOV appointed Jennifer Smith as the company’s new Chief Marketing Officer with an objective of expansion in global markets as well as demand generation.
BCOV’s revenue for the quarter ended September 2020 climbed 3.5% year-over-year to $49.1 million driven by the professional services and other revenue. During the quarter, EPS for the quarter was $0.03 compared to a $0.08 loss per share posted in the same period last year. BCOV’s Average annual subscription revenue per premium customer was $89,000 during the quarter.
Analysts expect revenue for the quarter ending December 2020 to be $49.8 million, indicating a 4.6% year-over-year growth. EPS is likely to grow at a rate of 15% per annum over the next five years. The company expects revenue to be in the range of $49.5 million to $50.5 million, including about $2.5 million from professional services revenue.
BCOV ended yesterday’s session at $18.33, rallying 110.9% year-to-date. Over the past six months, the stock surged 132.6%.
BCOV’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. It is currently ranked #28 of 98 stocks in the Software – Application Industry.
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BIP shares were trading at $49.66 per share on Thursday afternoon, down $0.07 (-0.14%). Year-to-date, BIP has gained 16.18%, versus a 17.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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