Asher Rogovy, chief investment officer for Magnifina, suggests Clearway because of “several measures indicative of a high-quality investment.”
“Clearway Energy, Inc (CWEN.A) displays several measures indicative of a high-quality investment. It appears very sensibly valued with a trailing P/E less than 6. Operating earnings is expected to grow by an annualized 17% for the next 2 years. On top of that, it pays a dividend around 5%. Their revenue has grown very consistently since 2014 (with only a modest decline in 2019) while maintaining their operating margin. They are not manipulating their cash flow numbers using non-cash compensation items which has become common in other industries. Clearway also focuses on cleaner energy with about 2/3 of its assets in wind or solar. While we find quantitative ESG ratings extremely problematic, qualitative ethical investors may be attracted to these greener forms of energy.
One risk factor is their debt level and financial strength. CWEN carries a lot of debt from infrastructure investments. Higher rates may impair its ability to make these investments with the same profitability. CWEN could benefit significantly from a Fed pivot.
Nevertheless, this stock looks very attractive from a number of angles. It stands out in the utility sector which is known for safe and slow growing investments.
We do not currently have a position in this security, but may initiate one by the time of publication pending further due diligence.”