Two Outstanding Growth Shares to Acquire Instantly and Maintain for Extended Periods Ahead
Two Outstanding Growth Shares to Acquire Instantly and Maintain for Extended Periods Ahead
We're at the initial stage of what could be one of the most significant financial trends ever. The supercycles related to decarbonization and digitalization are driving an immense demand for computer processing power and clean energy. In the coming years, businesses will have to invest billions, possibly even trillions, to support their digitalization and decarbonization strategies.
Given the magnitude of these trends, there's a high probability of numerous victors over the long term. However, two companies that shine for their high growth potential in line with these megatrends are Brookfield Infrastructure (BIPC [-0.32%]) (BIP [-0.92%]) and Constellation Energy (CEG [-1.87%]). Here's why they're superb investments to consider at the moment.
Straddling the trend
Brookfield Infrastructure boasts a globally diverse portfolio of utilities, midstream, transportation, and data infrastructure businesses. Around 60% of its business benefits from digitalization.
The company's data infrastructure platform is the most apparent advantage. Brookfield has built a global data center platform that's expanding rapidly due to the increasing demand for computing power. Moreover, its telecom towers and fiber assets are profiting from the continuous need for data transmission infrastructure. Brookfield is also investing almost half the capital needed to establish two semiconductor fabrication facilities in the U.S.
Meanwhile, its utilities and midstream assets are benefiting from rising energy demand, particularly that of lower-carbon natural gas. This situation is opening doors to new expansion opportunities.
Lastly, Brookfield sees substantial opportunities to acquire infrastructure assets worldwide. The necessity for capital to invest in digitalization and decarbonization is supplying Brookfield with additional opportunities to be a provider of capital. The company's current investment pipeline is as large as it has been in two years and continues to expand.
These factors contribute to Brookfield Infrastructure's belief that it should be able to increase its funds from operations (FFO) per share by more than 10% annually in the future. Moreover, Brookfield offers a high-yielding dividend (around 4%) that should grow by 5% to 9% per year. This combination of earnings and income growth sets Brookfield up for potential annual total returns in the mid-teens.
Skyrocketing growth potential
Constellation Energy is the nation's largest clean energy producer, primarily due to its leading nuclear power fleet. It also has a growing renewable energy portfolio.
The power producer has excellent clarity into its future growth due to the power purchase agreements it signed with utilities and corporate customers. They strengthen its robust growth forecast.
Constellation Energy anticipates delivering more than 10% compound annual earnings per share growth through 2028. It also aims to increase its dividend by approximately 10% annually after boosting its payout by 25% earlier this year. These growth drivers should enable it to produce impressive total returns over the subsequent years.
Constellation's outlook doesn't include the possibility of a nuclear energy resurgence. The company recently signed a deal with tech titan Microsoft to restart a nuclear-generating unit, which shut down in 2019 due to economic reasons. Microsoft will buy all the power the plant produces at a significantly higher price than other power sources due to its immense need for lower-carbon energy. That plant should restart in 2028, providing further earnings growth potential for Constellation Energy.
The power company is also exploring other methods to capitalize on rising electricity demand, such as potentially building small modular reactors and investing in other nuclear energy projects. These catalysts could extend and amplify its long-term growth prospects even further.
Given the immense demand for clean energy and computer processing power, investing in companies like Brookfield Infrastructure and Constellation Energy could prove beneficial. Brookfield Infrastructure, with its diverse portfolio in digitalization-driven sectors and significant investments in semiconductor fabrication facilities, has the potential to significantly increase its funds from operations and dividend payments. On the other hand, Constellation Energy, as the nation's largest clean energy producer, has a robust growth forecast and aims to increase its dividend by 10% annually, providing impressive total returns for investors.