As the economy advances, the requirement for electricity also advances, solidifying the utilities market’s prospects. Further, the adoption of renewable energy and new technologies is driving the market demand.
Given the industry’s tailwinds, it could be wise to invest in fundamentally sound utility stocks Pampa Energía S.A. (PAM), TransAlta Corporation (TAC), and Genie Energy Ltd. (GNE), which are bringing innovation to power grids.
The utility market powers a lot of industries and segments owing to its necessary nature, keeping its demand strong at all times. In recent years, the utilities market has expanded at a rapid pace with swift economic growth in various emerging markets, advancements in technology, and liberalization of markets. Also, the efforts towards transitioning to renewable energy, natural gas, and nuclear energy ensure long-term stability.
The utilities market is expected to grow to $8.83 trillion by 2028, expanding at a CAGR of 6.4%, driven by increasing global population, accelerated economic growth, growing investments in renewable energy, and increasing global utility mergers and acquisitions.
Further, key transformative trends, including AI adoption, smart meters, and digital-first customer solutions, are helping companies optimize their costs, improve reliability, and boost profitability.
Considering the industry’s bright prospects, investing in fundamentally strong utility stocks PAM, TAC, and GNE could be wise.
Let’s discuss the fundamentals of these stocks in detail:
Pampa Energía S.A. (PAM)
Headquartered in Buenos Aires, Argentina, PAM is an integrated power company, which operates through Electricity Generation; Oil and Gas; Petrochemicals; and Holding and Other Business segments. The company generates electricity through thermal plants, hydroelectric plants, and wind farms with a 5,332 megawatt (MW) installed capacity.
On August 30, 2024, PAM closed its indirect acquisition of 36% of the share capital and voting rights of Oleoducto de Crudos Pesados Ecuador S.A., in which PAM already held 64% of the share capital. With this, PAM became the sole owner of OCP Ecuador and consolidated its financial statements.
The strategic acquisition expanded PAM’s operations across new regions and will result in enhanced capacity and potential.
For the third quarter that ended September 30, 2024, PAM reported sales revenue of $540 million, of which its domestic sales were $465 million, up 13.7% year-over-year. Its operating income rose 4.1% from the year-ago value to $154 million. In addition, the company’s net income for the period came in at $146 million or $0.1 per share for the quarter, respectively.
Street expects PAM’s revenue for the fourth quarter (ended December 2024) to increase 134.9% year-over-year to $463.27 million, while its EPS is expected to be $0.11 for the same quarter.
Shares of PAM have gained 55.8% over the past six months and 84% over the past year to close the last trading session at $80.82.
PAM’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
PAM has a B grade for Momentum and Sentiment. It is ranked #10 out of 50 stocks in the Utilities - Foreign industry.
In addition to the POWR Ratings we’ve stated above, we also have PAM ratings for Value, Quality, Growth, and Stability. Get all PAM ratings here.
TransAlta Corporation (TAC)
Based in Calgary, Canada, TAC engages in the development, production, and sale of electric energy. The company operates in Hydro; Wind and Solar; Gas; Energy Transition; and Energy Marketing segments. It involves in the trading of power, natural gas, and environmental products.
On December 4, 2024, TAC completed the acquisition of Heartland Generation Ltd. and Alberta Power (2000) Ltd. from Energy Capital Partners for an aggregate purchase price of $542 million. The acquisition strengthened TAC’s portfolio with its flexible, fast-ramping capacity and marketing capabilities and will create meaningful cash flows.
For the third quarter, which ended September 30, 2024, NXGPY’s revenues came in at $638 million. Its adjusted EBITDA was $325 million. Furthermore, the company’s FFO for the quarter was $200 million for the period, and its FFO per share stood at $0.68.
Analysts expect TAC’s revenue and FFO for the fiscal year ended December 2024 to come in at $1.96 billion and $2.02, respectively. The company has surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past six months, the stock has gained 26.6% and 53.5% over the past year to close the last trading session at $10.53.
TAC’s promising outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Quality and Momentum. Within the Utilities - Foreign industry, TAC is ranked #14 of 50 stocks.
Click here to access additional ratings of TAC for Growth, Value, Stability, and Sentiment.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. The company functions through two segments, GRE and Genie Renewables. It develops, constructs, and operates solar energy projects for commercial and industrial customers.
On November 19, GNE closed on a $7.40 million fixed-rate term loan secured from the National Cooperative Bank (NCB) to finance a 10MW solar array portfolio. GNE purchased through its Sunlight Energy subsidiary, the arrays supply power to educational facilities in three Midwestern states via fixed-price solar PPAs.
During the third quarter that ended September 30, 2024, GNE reported total revenues of $111.92 million, and its income from operations amounted to $11.68 million for the period. Also, its adjusted EBITDA was $13.60 million, up 13.3% from the previous quarter.
Furthermore, non-GAAP net income attributable to Genie common stockholders came in at $10.90 million, whereas its non-GAAP EPS was $0.41 for the quarter.
GNE’s stock has dipped 2.5% over the past month to close the last trading session at $14.15.
GNE’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Momentum, Quality, Sentiment, and Value. GNE has topped among the 57 stocks in the Utilities – Domestics industry.
Click here to access GNE’s additional ratings for Growth and Stability.
What To Do Next?
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PAM shares were trading at $81.73 per share on Tuesday afternoon, up $0.91 (+1.13%). Year-to-date, PAM has declined -7.06%, versus a 4.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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