Feature Article
Exelon Corp: Undervalued, Steady Growth, Low Risk
By
Roger S. Conrad on
Jun. 10, 2024
Conservative Holding Exelon Corp (NYSE: EXC) spun out its unregulated nuclear power operations to shareholders as Constellation Energy (NYSE: CEG) in early 2022. And it’s fair to say no one—including me—anticipated the stock would rise nearly 400 percent since.
Neither did I think the remaining six-state regulated utility would return basically zero. And despite boosting dividends 13 percent since the spin, Exelon shares trade at just 14.6 times expected next 12 months earnings, versus 16.6 for the Dow Jones Utility Average.
MDU Resources: One Last Spin, Then a Potential Takeover
By
Roger S. Conrad on
Jun. 10, 2024
Last year, Aggressive Holding MDU Resources (NYSE: MDU) spun off its construction materials unit as Knife River (NYSE: KNF). Since then, the shares of KNF that MDU investors received per a 1-for-4 ratio have appreciated by roughly 75 percent.
Now MDU is spinning out its larger construction services business as Everus, in a deal expected “in late 2024.” The unit reported all-time record order backlog in Q1. And with growth opportunities including data center development and industrial reshoring, its launch promises to attract even more interest.
Lower Prices for High Quality Stocks Mean Better Buys
By
Roger S. Conrad on
Jun. 10, 2024
All Utility Report Card companies have released calendar Q1 results and updated guidance, save a pair of floundering renewable energy companies flirting with bankruptcy: FuelCell Energy (NSDQ: FCEL) and SunPower (NSDQ: SPWR).
For Portfolio companies, the verdict from later reporters’ results is the same as from the early returns. Number one, all of our companies are on track with the investment plans behind long-term earnings and dividend growth guidance.
More Telecom Cuts
By
Roger S. Conrad on
Jun. 10, 2024
Only three US communications companies have avoided dividend cuts since 1996 Deregulation: Giants Comcast Corp (NSDQ: CMCSA) and Verizon Communications (NYSE: VZ), and specialty fiber broadband service provider Cogent Communications Holdings (NSDQ: CCOI).
Last month, small town-focused Telephone & Data Systems (NYSE: TDS) slashed its quarterly dividend from 19 cents to just 4 cents per share. The -79 percent cut reflects the proposed sale of wireless operations and related spectrum by the company’s 72.66 percent-owned US Cellular Corp (NYSE: USM) unit to T-Mobile US (NSDQ: TMUS).
Two Ways to Play the Return of Utility M&A
By
Roger S. Conrad on
Jun. 10, 2024
No merger between operating utilities has ever failed to create a stronger, more resilient company. That’s a claim no other sector can make.
Providing electricity, heat, communications and water service is a scale business. Larger companies spread out costs over a wider population and raise vast sums of capital more easily. And they’re better able to handle the inevitable handle shocks to the system, be they natural or man-made disasters.
Southern Company: Poised for Post-Vogtle Growth
By
Roger S. Conrad on
May. 9, 2024
In late April, Georgia Power’s unit 4 of the Vogtle nuclear plant entered full commercial service—joining Unit 3, which has been operating smoothly since last July. And with customer rates to pay for the facility fully in place, the book is now finally closed on a construction project that began in August 2008 and ultimately cost $30 billion, versus initial estimates of $14 billion.
During Southern’s Q1 earnings and guidance call earlier this month, CEO Chris Womack stated unequivocally his view that the US “is going to need more nuclear.” But he also said “we’re going to celebrate what we’ve done at Vogtle for a very long time before we give any consideration” to launching another project.
AT&T Inc: “Showing” In the US Telecom A Winner for Investors
By
Roger S. Conrad on
May. 9, 2024
When a stock sells for just 7.7 times expected next 12 months earnings, it’s clearly unloved by investors. And that’s clearly the case for America’s number 3 telecom AT&T Inc (NYSE: T), after returning less than 3 percent a year over the past decade.
There are numerous reasons for AT&T’s underperformance. But the biggest was US government rejection of its proposed merger with T-Mobile US (NSDQ: TMUS), which led to a disastrous, debt-expanding foray into the entertainment business. And the company has dealt with the fallout ever since, including a first-ever -46.6 percent dividend cut as part of the Warner Brothers (NSDQ: WBD) spinoff in April 2022.
Strong Q1 Results Portend Solid Returns
By
Roger S. Conrad on
May. 9, 2024
Roughly 3 in 4 Utility Report Card companies have released their calendar Q1 results and updated guidance. Most of the rest should do so in the next week to 10 days.
This issue’s company-by-company URC comments highlight what investors need to know about the results so far. That includes the 29 portfolio utilities issuing their numbers. And I’ll have my thoughts on the rest in next’s month’s issue, or beforehand for portfolio recommendations if action is needed.
Uniti Group Buckles, UGI Corp Off the List
By
Roger S. Conrad on
May. 9, 2024
Debt remains the number one threat to essential service dividends. The latest to fall victim: Telecom infrastructure company Uniti Group (NSDQ: UNIT).
This month Uniti announced it will merge with privately held Windstream Holdings, its former parent and still largest customer by far. Management says the union will create the “premier insurgent fiber provider.” But this is really a cost-cutting and debt reduction deal: The companies target $100 million in operating expense cuts and “$20 to $30 million” in capital spending “synergies.”
Best Renewable Energy Stocks to Bet on an Emerging Recovery
By
Roger S. Conrad on
May. 9, 2024
For the first time ever, solar energy accounted for “more than half” of US electricity generation additions in 2023: That’s from a report released this week by Wood MacKenzie and the Solar Energy Industries Association.
Total installed capacity was also a record at 32.4 gigawatts. That was up 51 percent from 2022 levels and 37 percent above 2021, the previous record year for solar installation. And utility-scale dominated at 69 percent of the total.
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