The Canadian market is continuing to trade on a positive note this year. The S&P/TSX Composite Index has risen by 5.7% this year after ending 2020 with minor 2.2% gains. Improving economic activity, employment situation, and corporate earnings are boosting investors’ confidence as the global pandemic gradually subsides.
However, the shares of many high-growth companies — with amazing future growth potential — are still trading cheap. That’s why it could be the best time to buy such cheap stocks as they could help you make millions in the coming years. Let’s take a closer look.
The world’s most-followed investor Warren Buffett doesn’t believe in taking unnecessary risks in the market. At the same time, he doesn’t shy away from investing in new emerging trends as early as possible to maximize his gains. For example, Buffett-led Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) invested in the Chinese electric carmaker BYD back in 2008 — well before Tesla became popular. Currently, Berkshire has 225 million shares or about an 8.2% stake in BYD. This investment has already yielded an astonishing 2,442% return for the 90-year-old legendary investor.
Apart from electric cars, another fast-growing sector is renewable energy. This is one reason why Berkshire Hathaway Energy — the subsidiary of Buffett’s investment firm — is heavily investing in the renewable energy sector including wind, solar, and hydropower. A study by the California-based consulting firm Frost & Sullivan suggests that the renewable energy market could attract investments worth about US$3.40 trillion by 2030. Such estimates showcase the renewable energy market’s huge future growth potential as the demand skyrockets in the coming years.
Here’s one amazing Canadian stock to buy today if you want to benefit from this exponentially growing market.
TransAlta Renewables (TSX:RNW) is a Calgary-based renewable energy firm. The wind energy segment accounts for more than half of its total revenues, while the other major portion of its revenue comes from the hydroelectric segment. TransAlta owns 23 wind power plants, 13 hydroelectric facilities, one solar power facility, and seven natural gas generation plants.
In 2020, the company’s revenue dropped by 2.2% due to the COVID-19 related challenges in the first half of the year. Nonetheless, TransAlta’s revenue growth came back on track in the second half of 2020. Analysts expect its revenue to grow substantially in 2021.
TransAlta Renewables’ management is now focused on expanding its footprints in the United States and Australian market. In 2020, its renewable power production rose by 19% as its U.S. wind and solar segment power production surged. Analysts expect its adjusted net profits to jump by nearly 90% in 2021. The company’s long-term power generation contracts make its business more stable with predictable cash flows.
If you’re looking to exponentially grow your savings by investing in stocks, then you must focus on investing in fundamentally good companies for the long-term like Buffett. The true growth potential of the renewable energy market isn’t yet fully unleashed. That’s why you may want to add some good renewable energy stocks like TransAlta Renewables to your portfolio. And fortunately, such stocks are cheap right now. Such stocks could yield outstanding returns in the coming years.
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David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Tesla and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2021 $225 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares). Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.
The post Warren Buffett: 1 Tiny Stock to Make Millions From a US$3.4 Trillion Market appeared first on The Motley Fool Canada.
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