RE Royalties, TUI and Chevron in Focus: Three Promising Stocks, Three Bets on the Future

RE Royalties: A Unique Situation with Potential

You do not have to build wind turbines or manufacture solar panels to profit from the energy transition. RE Royalties focuses on financing. The Canadian company provides capital to developers and operators and, in return, receives contractually agreed-upon shares of their revenue. The royalty model, familiar from the commodities sector, is thus being applied to renewable energy.

The appeal lies in the long-term cash flows. With a combination of loans and royalties, the repaid loan principal can be reinvested while the revenue share continues. Ideally, this creates a growing portfolio of recurring revenue for RE. However, even a financier remains dependent on its customers delivering results: Delayed commissioning, weak electricity revenues, or payment defaults all take a toll on the bottom line.

The partnership with the US solar developer Solaris Energy demonstrates just how ambitious these plans are. In early August, RE invested another USD 1 million, increasing the capital committed to Solaris Energy's portfolio to USD 4.8 million. The portfolio comprises 16 decentralized solar projects with a combined peak capacity of approximately 15.24 MW. The equity stake is adjusted during funding draws to ensure that an agreed-upon minimum return is targeted over an initial period of 25 years. Thereafter, royalties are expected to continue flowing for the remaining operational life.

Even more potential lies in a non-binding letter of intent. The partnership could reach a total financing volume of USD 67.5 million, including the USD 4.8 million already invested. An additional USD 13.7 million is allocated to 13 projects with contracts or awards, and USD 49 million to 83 projects under development. This would represent a significant growth step for RE. However, before these become binding investments, due diligence, approvals, and final contracts are required.

RE is also exploring strategic alternatives. With the support of PwC Corporate Finance, RE is exploring, among other things, partnerships, joint investments, new equity or debt financing, and a potential sale of the company. It remains unclear who will provide the capital and on what terms. For shareholders, however, this presents a potentially unique situation. A financially strong partner could help implement more projects and broaden the business model. A sale is also an option. A takeover or a guaranteed premium is by no means a certainty.

The stock is also attractive to dividend hunters: The specialized financier of the energy transition offers investors a current yield of over 10%. For 25 quarters now, RE has reliably paid out royalties of CAD 0.01 per share—without cuts or missed payments. The dividend is therefore not a short-term gimmick, but shows the business model works—and is growing steadily. After all, the energy transition is devouring enormous sums of money. Project developers in the cleantech sector, in particular, are seeking significant capital that, as far as possible, does not dilute their voting rights and equity stakes through financing measures. RE had long paid out CAD 0.01 per quarter. In December 2025, however, the Board of Directors switched to annual decisions, which should not reduce the bottom-line return. Analysts therefore expect an annual dividend of CAD 0.04.

The half-year results were published at the end of August. Total revenue from royalties, financing, and energy fell from CAD 3.61 million to CAD 2.81 million in the first six months. However, pure royalty revenue increased from CAD 0.62 million to CAD 0.88 million. The net loss attributable to shareholders for the first half of the year amounted to CAD 1.31 million. In the second quarter alone, the company posted a small net profit of just under CAD 88,000. This was aided by the reversal of a previously recorded allowance for a receivable.

The balance sheet deserves special attention. It shows that an investment in RE is not without risk. Anyone speculating on the high growth opportunities and potential price increases of RE Royalties must be aware that, for example, shareholders' equity was negative at CAD 6.88 million as of the end of June. In its management report, RE also points to uncertainties regarding the company's ability to continue as a going concern should necessary financing fail to materialize and insufficient revenue be generated. The strategic process with PwC Corporate Finance should therefore not be viewed merely as a fantasy of a takeover.

For bold investors, however, this presents a good opportunity. If management succeeds in convincing new investors of the business model, the stock has significant upside potential. With a sustainable capital partnership, the Solaris pipeline could open up a whole new level of growth for the company. This would represent concrete progress for the stock. Should a sale to external investors occur, however, the price is likely to be significantly above the current market capitalization of approximately CAD 15 million, given the full project pipeline.

RE Royalties offers investors an unusual mix of long-term revenue potential and short-term financing needs and remains a highly speculative special situation. Given its low market capitalization, this penny stock is generally more suitable for risk-aware investors who should monitor their holdings closely after a purchase and protect them with a stop-loss order.

TUI: A Desire for Vacation Amid Uncertainty

At TUI, the September 22 booking update provided new insights. The travel group narrowed its forecast for adjusted operating profit in fiscal year 2025/26 to between EUR 1.2 and 1.3 billion at constant exchange rates. Previously, the range was EUR 1.1 to 1.4 billion. This provides more clarity but does not represent an increase in the midpoint. Furthermore, the forecast remains below the previous year's figure of EUR 1.413 billion.

Recent momentum has come from hotels and cruises, as well as improved booking trends in the tour operator and airline businesses. For winter 2026/27, however, booked revenue is still 7% below the previous year's level. Over the past four weeks, the shortfall has narrowed to just 1%. Customers are booking later, and according to TUI, selling prices are holding up well.

So there are signs of recovery, but no clear path forward yet. The revenue forecast remains on hold. The earnings outlook also assumes that geopolitical tensions do not escalate significantly and that fuel remains available. For investors, the key question remains whether improved short-term booking momentum will become a sustainable trend. TUI remains an interesting recovery play, the success of which depends heavily on the broader environment. Analysts are also optimistic: Currently, 12 banks and research firms recommend "Buy", while only 4 analysts have a "Hold" rating. There are currently no "Sell" recommendations. The average price target of just under EUR 10 suggests over 50% upside potential. Fundamentally, the stock is also very attractively valued. Estimated P/E ratios for 2026 and 2027 stand at just 6 and under 5, respectively. The industry median for the peer group in the tourism sector is more than twice as high.

Chevron: Lucrative Oil Business with AI Potential

Chevron illustrates what high energy prices can mean for a major producer. In the second quarter of 2026, the US oil company posted a profit of USD 12.1 billion, up from USD 2.5 billion in the prior year. On an adjusted basis, the profit was USD 12 billion. Operating cash flow reached an impressive USD 22.6 billion. Global production rose 20%, primarily thanks to the acquired Hess operations and additional production in the US. Debt fell by USD 8.4 billion during the quarter.

In addition to its traditional oil business, a new opportunity is emerging. Chevron signed a 20-year power supply agreement with Microsoft. A dedicated power supply with a capacity of approximately 2.67 gigawatts is planned for a data centre in West Texas. This expansion now extends the company's scope to address the energy demands of the AI industry.

The most recently approved quarterly dividend is USD 1.78 per share. This implies an annualized yield of 3.5%. Record quarters, however, are not a permanent state of affairs. Falling oil prices and refining margins could once again weigh on earnings. Within the trio, Chevron currently offers the strongest absolute cash inflows; nevertheless, the valuation should be based on realistic earnings power over the course of the commodity cycle.

Analysts remain confident: 24 banks and research firms recommend the stock as a "Buy", while only three institutions rate it "Hold". Only one analyst currently recommends "Sell". However, the average price target of just over USD 220 indicates only about 10% upside potential at current price levels.

RE Royalties offers investors the most exciting special situation among the three stocks presented, but it also has short-term financing needs. Successful financing is also the key to significant price gains. With TUI, investors are betting on stronger booking trends and a sustainable price recovery. With Chevron, shareholders can continue to hope for strong energy earnings and new power generation business driven by the booming AI industry.