For immediate release
Chicago, IL – February 25, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: PNM Resources Inc. PNM, Entergy Corp. ETR, Xcel Energy Inc. XEL, WEC Energy Group Inc. WEC and Atmos Energy Corp. (ATO).
Here are highlights from Thursday’s analyst blog:
5 utility stocks to buy to stay safe in the face of high volatility
Wall Street has been reeling from high volatility since the beginning of this year. The market participants’ nightmare continues as two major equity indices are already in correction territory and the third is very close. Anticipation of a tougher-than-expected stance from the Fed in March to tackle soaring inflation and geopolitical disputes between Russia and Ukraine took a huge toll on investor confidence.
At this point, it will be prudent to stay invested in defensive stocks in the utilities sector, as they are less volatile in a market downturn. Five of these stocks with a favorable Zacks ranking are PNM Resources Inc., Entergy Corp., Xcel Energy Inc., WEC Energy Group Inc. and Atmos Energy Corporation.
Turmoil on Wall Street
As of Feb. 23, the market benchmarks, the tech-heavy S&P 500 and Nasdaq Composite, were in correction territory, meaning both indexes fell more than 10% from their recent highs. historical. The tech-laden index is currently just 1.5% above bearish territory, reflecting a 20% drop in value from its recent all-time high. The blue-chip Dow Jones is just 22 points above its corrective territory.
Public services immune to the vagaries of the economic cycle
The utilities sector is mature and fundamentally sound as the demand for these services is generally immune to changes in the economic cycle. This is because these companies provide basic services like electricity, gas, water and telecommunications, which can never run out of demand.
Therefore, adding stocks to the utilities basket generally lends more stability to a portfolio in uncertain market conditions. Additionally, the sector is recognized for the stability and visibility of its earnings and cash flow. Stable earnings allow utilities to pay consistent dividends that make them more attractive to income-oriented investors.
Utilities have a reputation for security given the regulated nature of their business, which gives their revenues a high level of certainty. These companies also benefit from the national orientation of their activities, which protects them from foreign currency translation problems.
Also, utility stocks are generally low beta stocks (beta > 0 but
Our top picks
We narrowed our search to five utility stocks with growth potential for 2022. These stocks have seen good earnings estimate revisions over the past 30 days. Each of our picks carries a Zacks rank #2 (buy). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NMP Resources continues to invest in its utility infrastructure and develop cost-effective power generation units to provide reliable and affordable power. PNM should merge with AVANGRID by the end of the current year, which should improve its performance.
PNM Resources aims to exit its coal-fired generation units and have an emissions-free generation portfolio by 2040. Additionally, it plans to replace coal with cleaner energy sources in its generation portfolio. PNM has sufficient liquidity to meet its short-term obligations and fund capital expenditure projects.
PNM Resources forecasts a profit growth rate of 6.7% for the current year. The Zacks consensus estimate for current-year earnings has improved 1.6% over the past 30 days. PNM has a current dividend yield of 3.11% and a beta of 0.49.
Entrance has an investment plan in place to maintain utility support and upgrade distribution and transmission. These investment plans are expected to drive customer and industrial load growth, which should boost Entergy’s earnings.
Over the next three years, ETR plans to invest $12 billion. Entergy also makes regular investments to strengthen its renewable energy portfolio. In its EDGE plan, ETR plans to add 1,000 MW of renewable energy over the next five years.
Entergy forecasts a profit growth rate of 5.9% for the current year. The Zacks consensus estimate for current-year earnings has improved 0.3% over the past 30 days. ETR has a current dividend yield of 3.87% and a beta of 0.62.
Xcel Energy is well positioned to benefit from its long-term investments and renewable energy production. The expansion of XEL’s electricity and natural gas customer base as well as the application of new tariffs act as its main tailwinds.
Xcel Energy intends to become carbon neutral by 2050. XEL regularly pays dividends, thereby enhancing its shareholder value. In addition, it has sufficient liquidity to meet its short-term obligations.
Xcel Energy has an expected profit growth rate of 7.4% for the current year. The Zacks consensus estimate for current-year earnings has improved 0.3% over the past 30 days. XEL has a current dividend yield of 2.78% and a beta of 0.34.
WEC Energy continues to add electricity and natural gas customers, which should stimulate demand for its services. The WEC is targeting an investment of 17.7 billion over the period 2022-2026 to strengthen its infrastructure and add renewable assets to its portfolio. The continuous investment increases the efficiency of operations and allows the company to provide reliable services.
WEC Energy is also focused on net carbon neutrality by 2050 relative to 2005 levels and spending on profitable low-emission generation projects. In addition, the WEC continues to increase its shareholder value through dividend increases.
WEC Energy forecasts a profit growth rate of 4.6% for the current year. The Zacks consensus estimate for current-year earnings has improved 0.2% over the past 30 days. The WEC has a current dividend yield of 3.24% and a beta of 0.25.
Atmospheric energy continues to benefit from growing demand from its expanding customer base. ATO plans to invest between $13 billion and $16 billion in the 2022-2026 fiscal period to increase the reliability of its pipelines and efficiently serve its customers.
Returns in the year following the capital investment continue to drive Atmos Energy’s performance and enable it to pay regular dividends. ATO has enough cash to service its short-term debts.
Atmos Energy has an expected earnings growth rate of 7.8% for the current year (ending September 2022). The Zacks consensus estimate for current-year earnings has improved 0.5% over the past 30 days. ATO has a current dividend yield of 2.56%. and a beta of 0.47.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
This company could rival or surpass other recent Zacks stocks that are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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