Are These Utility Stocks The Best Stocks To Buy Right Now?
With volatility persisting in the stock market, investors may be thinking of rotating into lower-risk utility stocks. In fact, with all that has been going on this year, utilities have been one of the few corners of the stock market that has shown resilience. For the uninitiated, the industry includes companies that provide us with electricity, gas, and water. Utility stocks are often sought after by investors for their resilience, low volatility, and ability to pay steady and growing dividends over time. Therefore, when the stock market is volatile, the relative calm of utility stocks can provide safety for investors.
A utility stock that investors may be on the lookout for is Dominion Energy (NYSE: D). Recently, its subsidiary Dominion Energy Virginia entered the rooftop solar space. Notably, it announced the launch of BrightSuite, a full-service residential solar installation company. Interestingly, this move marks a significant pivot for Dominion as it shifts from a centralized model to a distributed one. BrightSuite aims to bring clean power closer to the point of demand and is made up of certified installers that have served over 2,000 residents across the state. And on that note, here are the four utility stocks to check out in the stock market today.
Top Utility Stocks To Watch Today
- American Water Works Company Inc. (NYSE: AWK)
- Sempra Energy (NYSE: SRE)
- Essential Utilities Inc. (NYSE: WTRG)
- Exelon Corporation (NASDAQ: EXC)
American Water Works Company
Starting us off today is American Water Works Company (AWK). In essence, it is a water and wastewater utility company. Through its subsidiaries, the company provides its services to approximately 3.4 million active customers in 14 states. The company operates approximately 80 surface water treatment plants, 160 wastewater treatment plants, and a whopping 52,500 miles of water mains and pipes among other assets. Earlier this month, the company announced that its unit, Military Services Group (MSG), received a long-term contract worth $341 million.
Particularly, the contract involves the ownership, operation, maintenance, and replacement of the wastewater utility system assets at Naval Station Mayport in Jacksonville, Florida. Being a long-term contract of 50 years, the contract will be subject to annual economic price adjustments. Altogether, MSG now provides services to 12 Army installations and five Air Force installations. MSG is also aiming to secure two more defense deals with the possibility of contract upgrades on existing bases. Military contracts aside, a large portion of AWK’s earnings comes from civilian deals. The overall water and wastewater infrastructure of the U.S. is aging, and AWK plans to make systematic investments in the coming years to upgrade the aging water infrastructure. Thus, should you add AWK stock to your watchlist?
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Sempra Energy
Another top utility stock to watch is Sempra. For the most part, it is a North American energy infrastructure company that focuses on electric and natural gas infrastructure. For a sense of scale, Sempra hires approximately 20,000 employees and serves more than 40 million consumers worldwide. Its operating companies include Southern California Gas Company and San Diego Gas & Electric to name a few. In late June, the company announced that it has entered into a heads of agreement (HOA) with INEOS Energy Trading Ltd., a subsidiary of INEOS, a global chemical products manufacturer.
Namely, the HOA is for a 20-year liquefied natural gas (LNG) sale and purchase agreement for approximately 1.4 million tonnes per annum (Mtpa) of LNG. “INEOS is one of Europe’s largest end-users of natural gas and we look forward to building a long-term relationship with a company that shares our vision of increasing the world’s energy security while simultaneously advancing lower-carbon energy sources,” said Justin Bird, CEO of Sempra Infrastructure. With that being said, should you invest in SRE stock?
Essential Utilities
Following that, we have Essential Utilities. It is one of the largest publicly traded water, wastewater, and natural gas providers in the U.S. For a sense of its reach, the company serves approximately 5 million people across 10 states under the Aqua and Peoples brands. Furthermore, with over 130 years of experience in the industry, Essential has a track record of regulatory compliance, operational efficiency, and environmental stewardship.
In May, Essential posted its financial results for the first quarter ended March 31, 2022. Getting straight to it, the company posted total revenues of $699.3 million for the quarter, an increase of 19.8% from the same period last year. As for its profits, Essential reported a net income of $199.4 for the quarter, up from $183.7 million a year ago. Earnings per share came in at $0.76, up 5.6% from $0.72 in the year prior. In the same report, Essential reaffirmed its guidance for the year. Specifically, it forecasts earnings per diluted share to range from $1.75 to $1.80. Along with that, the company continues to expect its earnings per share to grow on a compounded basis by 5% to 7% from 2021 to 2024. All in all, is WTRG stock a buy?
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Exelon
Last, but not least, we have Exelon, the largest utility company in the U.S. In short, the company serves more than 10 million customers through six fully regulated transmission and distribution utilities. Namely, these would include Atlantic City Electric (ACE), Baltimore Gas and Electric (BGE), and Commonwealth Edison (ComEd) to name a few. Further, Exelon is recognized as an industry leader that boasts best-in-class operations, with utilities achieving the top quartile in customer satisfaction and reduced outage frequency. Over the past year, EXC stock has soared more than 40%.
On May 8, the company reported its first-quarter 2022 results. For starters, the company posted a total revenue of $5.32 billion, rising 15% from the year-ago figure of $4.63 billion. Along with that, its bottom line improved 16.4%, rising to $0.64 from $0.55. In the same earnings report, Exelon provided its guidance for the year. Notably, it expects earnings to be in the range of $2.18-$2.32 per share. Furthermore, it plans to invest $29 billion in the 2022-2025 period to strengthen its electric transmission and distribution, and gas delivery infrastructure. As such, is EXC stock worth the investment?
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