Banking on Canada’s Green Revolution: 2 Stocks to Watch

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Written by Christopher Liew, CFA at The Motley Fool Canada

The Green Revolution in contemporary times generally refers to a country’s climate change targets and the transition to low-carbon or clean energy. Even investors who want to make a difference engage in ESG (environmental, social, and governance) investing and add renewable energy stocks to their portfolios.

However, companies that can produce food with fewer emissions are also good investment prospects for ESG investors. Nutrien (TSX:NTR) and Northland Power (TSX:NPI) are the stocks to watch if you want exposure to both worlds. The former transforms agriculture, while the latter makes a greener planet.

Challenge to feed the world

Nutrien is the world’s largest provider of crop inputs and services. The $38.24 billion company operates a world-class network production, distribution, and retail facilities network. Its focus is to create long-term shareholder value by advancing key ESG principles. At $77.33 per share, this large-cap stock pays a decent 3.75% dividend.

The agriculture company knows the daunting global challenge of feeding approximately 10 billion people by 2050. Nutrien’s resolve is to cultivate solutions for growers to increase food production sustainably for generations to come.

Today, Nutrien provides complete agriculture solutions to customers, including nutrients, crop protection products, seeds, services and digital tools. It has over 2,000 retail selling locations in seven countries where growers can obtain products and services to feed the world. More than 4,000 consultants offer advice and solutions for different crops.

In the first half of 2023, sales and net earnings fell 20% and 79% year over year to US$17.76 billion and US$1 billion. The declines are due to the tight global grain and oilseed supply in the agriculture and retail segment and weakened global potash prices in the crop nutrient market.

“Nutrien’s results have been impacted by unprecedented volatility in global crop input markets over the last 18 months. We continue to see demand strengthen in our key markets, in particular North America. However, the process of recovery has been more uneven in offshore markets,” said Ken Seitz, Nutrien’s president and chief executive officer.

Seitz added the game plan is to implement strategic actions to reduce controllable costs and enhance free cash flow (FCF) in 2023 and beyond. He said Nutrien commits to disciplined capital allocation while focusing on long-term value creation. The stock’s overall return in 3.01 years is 54.49%.

Clean and green company

Northland Power’s facilities in Asia, Europe, Latin America, and North America produce electricity from clean-burning natural gas and renewable resources (wind and solar). If you invest today (20.86 per share), you can partake in the 5.75% dividend.

The $5.28 billion independent power producer owns three gigawatts (GW) of operating generating capacity and boasts a significant inventory of early to mid-stage development opportunities. The combined potential capacity of the projects in the pipeline is 16 GW.

Northland aims to be a top clean and green developer, constructor, owner, and operator of sustainable infrastructure assets. It promises to increase shareholder value by focusing only on high-quality projects supported by long-term revenue contracts.

Responsible investors

Nutrien and Northland have depressed prices due to elevated market volatility. However, as more responsible investors support their ESG goals, expect the stocks to deliver outsized gains.

The post Banking on Canada’s Green Revolution: 2 Stocks to Watch appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.