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Any company that makes money by selling oil will hurt. That includes best-in-class stocks like Suncor (TSX:SU)(NYSE:SU) and Imperial Oil (TSX:IMO)(NYSEMKY:IMO).
Sunocr and Imperial are both considered integrated oil companies. That means they control the entire value chain, including production, transportation, and refining.
Integrated oil stocks were traditionally strong. Diversification allowed them to minimize volatility and invest throughout the cycle. However, these strengths will not overcome falling selling prices.
It doesn’t matter how well-run a company is. If their profits are a direct function of commodity prices, they’ll suffer when those prices fall. With demand entering secular decline, the future will be difficult for fossil fuel businesses.
Brookfield Renewable (TSX:BEP.UN)(NYSE:BEP) stock is the best way to profit. If history is any suggestion, some companies will grow big enough to become the Exxon’s and Chevron’s of renewable energy. Brookfield has an early lead.
The biggest advantage this company has is experience. Since 2000, shares have posted double-digit annual gains, including a dividend that regularly exceeds 4%. Renewable energy is an emerging opportunity, but Brookfield already has a resume that you can trust.
Over the last five years, $1.5 trillion was invested in renewable energy infrastructure. Over the next five years, investment should total $5 trillion, growing even more as time goes on. Certain stocks will benefit from this massive growth market, and it won’t be oil companies.