A company that had reportedly recently put itself up for sale, Northland Power (TSX:NPI) automatically finds itself on my watch list. Some analysts have speculated a deal did not go through for this Canadian renewable player due to the company’s high operational leverage to wind firms and high international exposure.
However, I remain baffled at the lack of a deal considering Northland’s excellent portfolio of assets and overall impressive growth trajectory.
A deal may or may not materialize in the future. A partial spinoff of some of the company’s assets is possible. I do think Northland represents good value today relative to its growth potential and the increasingly bullish appeal of the renewable sector generally. Capital inflows into renewables companies like Northland, whether driven by ESG (Environmental, Social, and Governance) mandates or not, continues to be heavy. I expect such a trend to continue for some time, providing investors with a protective floor for their investment.
Additionally, I do see the potential for increased consolidation in this sector broadly as energy companies aim to diversify revenue streams and invest in the future, meaning renewable assets could see a meaningful spike in value as interest surges and deals materialize.
I would therefore recommend investors pick one or two renewables plays such as Northland and add these to a watch list given this heightened level of market interest in these assets.
Invest wisely, my friends.