Wait for a pullback on Boralex, says Christine Poole

That’s too hot, says Christine Poole, CEO and managing director at GlobeInvest Capital Management, who
thinks investors should find a better entry point.

“The renewable space is an attractive space and I do think that it’s a secular growth theme and it’s not going to go away,” said Poole, speaking on BNN Bloomberg on Wednesday. “All countries around the world are trying to become greener, corporations are decreasing their carbon footprint, so I think that that is really a theme that’s going to stay in place for a number of years and you want to have exposure there.”

“Boralex is a renewable power generation director so that’s a good name [but] I think Borlalex has also done quite well. This past year, it has run up with the focus on green energy, so in terms of where it’s trading at now you might want to wait for a pullback,” Poole said. “But for a long-term play I think these companies do represent good investments,” she said.

Quebec-headquartered Boralex operates wind, hydroelectric, solar and thermal power facilities in Canada, France, the UK and the United States and is currently the largest independent onshore wind power company in France, with a total installed capacity worldwide of about 2,000 MW. Last year, Boralex announced a refinancing of its wind farm operations in France to the tune of $1.7 billion, the largest such refinancing in renewable energy in France to date, making approximately $178 million now available in
financial resources which the company has put towards its debt, along with about $380 million made available for current and future construction projects.

“This refinancing operation increases our financial flexibility and creates an even stronger bond with our European financial partners, who have all expressed great confidence in our leadership and business model, for which I thank them,” said Bruno Guilmette, CFO of Boralex in a press release.

Ahead of Boralex’s third quarter results due on November 11, the company saw its earnings grow by four per cent in its latest quarter, the company’s Q2 delivered in August. There, Boralex managed combined EBITDA(A) of $107 million, up from $103 million a year earlier, on better wind energy sales in Canada, the repowering of its Buckingham power station and a reduction in development costs.

Management spoke in the Q2 press release of the rising demand for renewable power, pointing to France’s wind power market which is expected to grow by 1.85 GW per year to 2028 and increases in solar power demand in New York State from 1.7 GW in 2019 to six GW by 2023.

Boralex’s share price has shot up this year from the $24 range at the start of January to $42 per share, and with the number of players in the renewable energy space still relatively small, stocks like Boralex continue to get plenty of attention, said Poole.

“There have been a lot of green energy-type funds, active or passive, and then ESG-type funds, which would attract all these green energy companies, and there’s probably more of a scarcity of supply in more or less the pure-play renewable companies,” Poole said.

“So, these funds have to find things to invest in and that’s why I think you’ve seen this run.”

“The stocks are getting overvalued in the near term, so that’s why I say find the ones you want to own. We will get market volatility, [so] use those pull backs to start building positions,” Poole said.