The Motley Fool

1 unexpected FTSE 250 renewable energy stock to buy now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Windmills for electric power production.
Image source: Getty Images

When I think of renewable energy stocks, many stocks come to mind. These are renewable energy producers, electric vehicle (EV) companies, miners that are digging up raw materials to be used in EVs and even petrol producers that are now diversifying into clean energy. 

But I would not have thought that this particular FTSE 250 stock could be brought into the clean energy discussion. After all, it is in a completely different segment. I am talking about the Mitie Group (LSE: MTO), which is best known as a facilities management and professional services company. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Small acquisition, big significance

So why does it come into the renewables category? A few days ago, it acquired Rock Power Connections, which focuses on supplying power to EV charge points. This buy will enhance the company’s green energy solutions, which have so far involved installation of charge points. 

The acquisition is relatively small, with a maximum payout expected to be £14.5m to be paid by financial year 2023 (which ends on 31 March of that year). This includes an initial payment of £10m and two more of a maximum of £4.5m in total, which are linked to performance targets. That this translates into a maximum of 0.7% of Mitie’s revenues for the financial year 2021 puts it into perspective. 

The renewable energy push

Still, I think it is an important acquisition to highlight. This is because of the growing focus on renewable energy at present. The UK government has a clear 10-point plan for what it calls the Green Industrial Revolution. Big oil producers expect oil demand to start declining before the end of the decade. EV stocks listed on US exchanges exploded late last year. Poster boy Tesla has seen its stock price more than double since then, even with a recent dip. 

I think these trends underline the fact that this decade may well belong to clean energy stocks. So it sounds like a strategic move on Mitie’s part to get in on the trend, which could hold it in good stead as the sector expands fast over the next few years.

What I’d do

The company’s future looked bright in any case. In another article I wrote on penny stocks today, it is one of my picks for 2022. It is ready to make profits again after last year’s pandemic blow. And its revenues have been on the rise anyway.

The one concern that I do have about the stock, and one that I have mentioned earlier as well, is its inconsistency in profit making. It has fallen into losses in three of the last five years where full-year data is available. For this reason, I will continue to keep an eye on how its earnings shape up. For now though, I think the company looks like it is doing well. And its latest acquisition appears to be a step in the right direction too. It is on my buy list now. 

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.