The Greencoat UK Wind PLC (LON: UKW) have risen 11.6% in 2022, and many investors wonder what comes next for the UK sustainable energy producer.
The good news is that rising electricity prices drove the rally in Greencoat shares in the UK, which is expected to remain high up to 2025. Such megatrends can sustain a massive rally in a company’s stock price.
Therefore, despite Greencoat UK Wind’s share price rising significantly in the past two months, investors could have more gains if the high electricity prices remain in place in the UK.
For example, many said that Tesla shares were overpriced at around $300 in August 2020, but the shares went on to rally to over $1,200 in November 2021 despite the stock split.
Tesla shares have been rising, driven by the secular trend among consumers who prefer to buy electric cars than cars running on internal combustion engines.
However, Greencoat UK Wind is no Tesla; hence, we do not expect very high share values or a trillion-dollar valuation. Still, the stock is being boosted by the high electricity prices in the UK, with the situation remaining unchanged for a few years.
The renewable energy company released its fiscal year 2021 results in late February, where it grew its net asset value by 39% to £3.09 billion compared to £2.23 billion at the end of 2020. As a result, the firm generated a 15% return on its net asset value in 2021 versus the 6.5% generated in 2020.
Investors noted that the company’s overall electricity production missed its budget by 20% to come in at 2,933 gigawatt-hours. Still, the higher than expected electricity prices more than compensated for, the lower power generation.
Shonaid Jemmett-Page, Greencoat UK Wind’s Chair, commented: “The year represented another significant period of growth, with GBP570 million invested in high-quality assets and GBP648 million of new equity raised. In the year, we grew our portfolio to surpass 1.4 gigawatt of installed capacity, which underlines the size and scale the group has attained since listing. We commissioned our first three subsidy-free wind farms, complementing our two contracts for difference investments, and these sit alongside our 38 renewables obligation investments as part of a balanced portfolio.”
“We continue to see an attractive pipeline of projects, both onshore and offshore, and remain strongly positioned to deliver more value-accretive acquisitions to enhance returns for our shareholders further.”
Therefore, investors who want to buy Greencoat shares could do so on deep pullbacks, given that the share price currently looks quite extended.
*This is not investment advice. Always do your due diligence before making investment decisions.
Greencoat UK Wind share price.
Greencoat UK Wind share price has risen 11.65% in 2022 and could be headed higher. What’s next?
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .
Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading