We are in the early innings of what is one of the largest investment megatrends in history. Supercycles around decarbonization and digitalization create a huge need for computing power and clean energy. Companies will have to are investing trillions of dollars in the coming years to support their digitalization and decarbonization initiatives.
Given the sheer magnitude of these trends, there are likely to be many winners in the long run. However, a number of companies stand out for their robust growth potential associated with these megatrends Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) And Constellation Energy(NASDAQ: CEG). Here’s why they’re great growth stocks to buy now.
Start your morning smarter! Wake up with Breakfast news in your inbox every market day. Register for free »
Brookfield Infrastructure has a globally diversified platform of utility, midstream, transportation and data infrastructure companies. The company estimates that about 60% of its sales benefits of the digitalization trend.
The data infrastructure platform is the most obvious beneficiary. Brookfield has built a global data center platform that is is growing rapidly due to the increasing need for computing power. In addition, the company’s telecommunications towers and fiber optic equipment respond to the ever-increasing need for data transmission infrastructure. Brookfield is also investing about half of the capital needed to finance the development of two of them semiconductor manufacturing facilities in the US
Meanwhile, the company’s utilities and midstream assets benefit of growing energy demand, especially low-carbon natural gas. This opens the doors to new expansion possibilities.
Finally, Brookfield sees a robust opportunity to continue acquiring infrastructure assets globally. Companies need capital to invest in digitalization and decarbonization of the economy, providing Brookfield with greater opportunities to be a capital provider. The company’s current investment pipeline is as large as it has been in two years and continues to expand.
These factors drive Brookfield Infrastructure’s view that the company should be able to grow its financial resources from operations (FFO) per share at an annual rate of more than 10% in the future. Additionally, Brookfield pays a high-yield dividend (about 4%) that should grow 5% to 9% annually. That combination of profit and income growth means Brookfield can potentially produce annually total return mid-teens.
Constellation Energy is the nation’s largest clean energy producer, largely due to its leadership position nuclear energy fleet. It also has a growing renewable energy portfolio.
The energy producer has great insight into its future growth thanks to the power purchase agreements it has signed with utilities and business customers. They contribute to the company’s robust growth prospects.
Constellation Energy expects so deliver more than 10% compound annual earnings per share grow until 2028. It also aims to increase its dividend by about 10% annually, after increasing its payout by 25% earlier this year. These growth engines must enable the country to produce strong overall will return in the coming years.
Constellation’s outlook does not take into account the potential for a nuclear energy revival. The company recently signed a deal with technology giant Microsoft to restart a nuclear generating unit, which was closed in 2019 for economic reasons. Microsoft will purchase all the energy the factory produces at a significantly higher price than other energy sources due to the enormous need for energy with lower CO2 emissions. That plant should come back online in 2028, providing further earnings growth potential for Constellation Energy.
The utility is also exploring other ways to capitalize on rising electricity demand, including possibly building small modular reactors and investing in other nuclear power projects. These catalysts could further expand and improve long-term growth prospects.
The world will need it a lot of more computing power and lower-carbon energy in the coming years. That bodes well for the future growth prospects of Brookfield Infrastructure and Constellation Energy. Thecompaniesal expect to grow their revenues by double digits in the coming years a lot of more growth potential beyond that. This makes them seem like smart growth stocks to buy for the long termall right now.
Consider the following before purchasing shares in Constellation Energy:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Constellation Energy wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $912,352!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. TheStock Advisoris on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns November 4, 2024
Matt DiLallo holds positions at Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners. The Motley Fool holds positions in and recommends Microsoft. The Motley Fool recommends Brookfield Infrastructure Partners and Constellation Energy and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term was originally published by The Motley Fool
