The S&P/ASX 200 Index (ASX: XJO) is experiencing a downturn today, with Infratil Ltd (ASX: IFT) facing a sharper decline amid broader market sell-offs. As of Monday’s lunch hour, the ASX 200 has dropped by 0.6% due to escalating trade tensions between the United States and China. Infratil shares have fallen by 1.6% during the same period, trading at $10.64 each.
Despite the current dip, Infratil, a New Zealand-based infrastructure investment company listed on both the ASX and the New Zealand stock exchange (NZX), has shown impressive long-term growth. The company’s market capitalization stands at $10.4 billion, with shares rising 115.0% over the past five years. Infratil also offers a 1.5% unfranked trailing dividend yield.
Reasons to Consider Infratil
As investors weigh their options, Elio D’Amato of EnviroInvest suggests that Infratil’s shares are poised for outperformance. He highlights three compelling reasons to consider buying this ASX 200 stock.
Momentum in Clean Energy
According to D’Amato, Infratil’s investments in renewables, digital platforms, and critical services worldwide provide a strong foundation for growth. He emphasizes the company’s strategic positioning in the clean energy sector, which has seen a significant re-rating of infrastructure tied to low carbon assets.
“Infratil continues to deliver via its infrastructure investments in renewables, digital platforms and critical services located around the world,” said D’Amato, who has a buy recommendation on the ASX 200 stock.
Growth and Income Potential
Infratil’s profitability and growth trajectory, coupled with modest passive income through dividends, make it an attractive option for investors. D’Amato notes that the company is not only profitable but also offers a small dividend yield, adding to its appeal.
Strong Financial Position
The company’s robust balance sheet and scale provide it with the flexibility to capitalize on future opportunities. D’Amato believes that Infratil’s financial strength positions it well to back future transitions and expansions.
“Infratil’s balance sheet and scale give it options to back future transitions,” he said. “We see clear upside, so it merits investors considering a buy.”
Strategic Investments in Data Centers
Beyond its clean energy focus, Infratil is making significant strides in the data center sector, an area experiencing rapid growth due to the rise of artificial intelligence (AI). On September 24, Infratil announced that its data center business, CDC, had secured approximately 100 megawatts (MW) of new contracted capacity. This announcement led to a 1.1% increase in Infratil shares, with an additional 1.2% gain the following trading day.
Infratil CEO Jason Boyes expressed confidence in the company’s growth trajectory:
“This announcement provides high visibility that CDC remains on track to double FY25 earnings by FY27. With other contracts signed since May, approximately 95% of forecast lease revenues are now under contract, and we remain confident in contracting the remaining capacity.”
Looking Ahead
The current market volatility presents both challenges and opportunities for investors. Infratil’s strategic investments in clean energy and data centers, coupled with its strong financial position, make it a compelling choice for those looking to navigate uncertain times. As trade tensions between the United States and China continue to influence global markets, Infratil’s diversified portfolio and growth potential offer a promising outlook.
For investors considering their next move, Infratil’s blend of growth, income potential, and strategic positioning may provide the stability and upside they seek in a turbulent market environment.
