Investing Topics: Electric Utilities

Is Inflation Reduction Act enough to get carbon capture off the ground? Historically, it’s been foolish to bet against innovation when there’s enough money behind it. And in this case, the US government’s largesse is very much leaning into a major investment trend in the private sector

Despite Avangrid Inc’s (NYSE: AGR) stalled bid for PNM Resources (NYSE: PNM), investors still have a major opportunity to bet on sector M&A this year.

I’ve been an adult volunteer for Scouting BSA since my oldest son entered Tiger Cubs almost 20 years ago. So I wasn’t going to pass up the opportunity to accompany my youngest to Philmont Scout Reservation in northern New Mexico earlier this month, my third and likely final trek to scouting’s paradise.

Unlike the highways my oldest son and I took on our cross-country journey in early June, there’s not a lot of connectivity in the backcountry. And I’d never have been able to stay off the grid were it not for the support of Elliott Gue, my partner of more than 8 years at Capitalist Times.

Nonetheless, as with the June trip, I picked up several investment insights I’d like to share with you now.

Exhaustive reviews, impossible public interest standards and no guarantee of eventual success: That’s the consensus outlook for mergers and acquisitions activity under the Biden Administration. Nonetheless, utility M&A is alive and well.

When a monthly power bill hits $1,700 plus, people are bound to wonder if there’s a better way to run an electricity market.

 

Single digit temperatures, record snowfall, millions of utility customers without service, nearly one-third of the state’s power generating capacity shut down and spiking electricity prices: That’s the damage so far from the Great Texas Power Crisis of 2021, which continues wreak havoc across the Lone Star State.

At first glance, MDU Resources (NYSE:MDU) shows a fairly discouraging investment profile. But there are three very good reasons to expect much better in the next 12 months.

From all indications, 2020 has been the worst wildfire season in California’s history. And the state is hardly alone in its misery, as an unprecedented combination of wind gusts and dry conditions have also inflicted record damages throughout the West and Rocky Mountain states.

The first three Portfolio electric utilities have announced Q3 results and delivered guidance,  and the common thread for all three companies is they ignited robust underlying earnings growth by deploying new renewable energy generating capacity, despite pandemic-related pressures

Not even rock-solid business resilience to Covid-19 fallout has been enough to swing US electric utilities from laggards to leaders this year. But another wave of mergers and acquisitions just might do the trick.