The stock market is enjoying a nice bounce-back year. The S&P 500 has rallied nearly 20% this year, while the tech-heavy Nasdaq is up over 35%. Because of that, many stocks currently sit near their 52-week highs.
However, not all stocks have been in rally mode this year. Brookfield Infrastructure (BIPC -1.98%) (BIP -2.01%) and NextEra Energy (NEE 0.55%) have fallen more than 20% over the past year and are currently trading closer to their 52-week lows. That makes them look like great buys right now, given how magnificent they've been at creating shareholder value over the years.
On sale despite having a great year
Shares of Brookfield Infrastructure have lost a quarter of their value over the past year and are down nearly a third from their 52-week high. They currently trade in the low $30s, not that far above their 52-week low of around $25 a share that they bottomed out at last month.
Brookfield's slumping stock price makes it seem like the global-infrastructure operator is having a bad year. However, that couldn't be further from the truth. The company is on track to deliver 10%+ funds from operations (FFO) per-share growth for the year. That's in line with its recent past. Brookfield has produced 11% compound annual FFO per-share growth over the past decade. That has given it the power to deliver magnificent total returns (14% annualized since its inception in 2008, crushing the S&P 500's 10% annualized return).
Brookfield expects to continue growing at a healthy rate in the future. It has a trio of organic-growth drivers (inflation-indexed rates, volume growth as the global economy expands, and capital projects) that should fuel 6% to 9% annual FFO per-share growth. That's enough to support its plan of increasing its dividend (which now yields 4.8%) by 5% to 9% per year.
In addition, Brookfield's capital-recycling strategy could continue pushing its growth rate into the double digits. It routinely sells mature assets and reinvests the proceeds into higher return opportunities. It has secured four deals this year (three data-center platforms and a global container-leasing company). Those investments give it lots of momentum to deliver double-digit earnings growth again in 2024.
Brookfield's combination of income, growth, and value potentially positions it to produce robust total returns in 2024 and beyond.
Weighed down by an affiliate that won't impact its growth
NextEra Energy's stock has lost nearly 30% of its value over the past year. Shares are currently down around $60 apiece, which is a lot nearer to its 52-week low ($47.14 per share) than its 52-week high ($88.61).
That slump comes even though NextEra Energy is having another strong year. The utility delivered 10.8% adjusted earnings-per-share growth through the first three quarters of this year. That kept it on track to achieve its 2023 guidance.
It also remains on pace with its long-term financial guidance. The company continues to expect that it will achieve its long-term earnings-growth rate of 6% to 8% per share through 2026 despite some issues plaguing its affiliate, NextEra Energy Partners. It said it would be disappointed if it didn't deliver earnings growth near the top end of that range. It has a massive and growing backlog of capital projects and a strong investment-grade balance sheet to continue funding its growth.
NextEra has a long history of supplying above-average earnings growth. It has delivered 9.8% compound annual adjusted earnings-per-share growth over the past decade while increasing its dividend at an 11% yearly rate. That's given it the power to deliver market-beating total returns over the last 10 years (13.9% versus 11.8% for the S&P 500).
The company could continue producing powerful total returns in the future. Given its lower share price, higher dividend yield (currently 3.1%), and likely 8% annual earnings growth rate, it has all the fuel needed to deliver double-digit total annual returns from here.
These magnificent value creators are on sale
Brookfield Infrastructure and NextEra Energy have done phenomenal jobs creating value for their shareholders over the years. They've grown their earnings and dividends at above-average rates, which helped them produce market-beating total returns. They have plenty of fuel to continue creating value for their shareholders in the future. That makes their sell-offs look like great buying opportunities since they increase the probability the companies can beat the market from here over the coming years.