10 Best Quality Penny Stocks To Buy

6. Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG)

Stock Price as of September 3: $2.04

Number of Hedge Fund Holders: 13

Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) is a leading player in Brazil’s energy sector with a strong portfolio that spans the generation, transmission, distribution, and commercialization of electricity.

It was established in 1952 and since then, the company has expanded its reach to become one of Brazil’s largest integrated energy companies, with operations in 24 states and the Federal District. It also participates in natural gas distribution and energy efficiency through its subsidiary, Efficientia.

The company operates an extensive energy infrastructure, including 60 hydroelectric plants, 7 wind farms, and 1 photovoltaic plant. Additionally, its transmission network stretches nearly 5,000 kilometers. With stakes in 83 generation projects across 10 states, 44 of which it wholly owns, the company’s broad involvement in energy production signifies its significant role in the sector.

In Q2, Companhia Energética (NYSE:CIG) reported a 7% increase in net revenue, totaling R$9.43 billion (1 BRL = US$ 0.18 as of September 3). The company also achieved a recurring EBITDA of R$1.9 billion, marking a 2% year-over-year increase.

The growth is supported by a strong operating cash flow of R$3.45 billion for the first half of the year, which points to the company’s ability to comfortably manage its debts, fund investments, and distribute dividends. By the end of the period, it had R$2.99 billion in cash and equivalents, which supports its financial stability.

Significant investments in renewable energy are a key aspect of the company’s growth strategy. In the first half of 2024 alone, it invested R$2.45 billion, a 43.1% increase from the previous year. The commencement of operations for photovoltaic solar plants in June 2024, with the Eduardo Soares and Jusante plants approaching full commercial operation, marks a significant expansion into renewable energy sources.

Additionally, Companhia Energética’s (NYSE:CIG) Gasmig subsidiary has started the Centro-Oeste Project, which involves constructing 300 kilometers of pipeline with a budget of R$780 million. For 2024, the company plans to invest R$6.2 billion, with R$2.4 billion already allocated. The company’s investment plan for 2024-2028 includes R$35.6 billion, focusing on modernizing and maintaining the electric distribution system and other regulated investments.

The company’s strong financial performance, substantial investment in renewable energy, and ongoing infrastructure projects highlight its capacity for growth and continued success in Brazil’s energy sector.

Companhia Energética (NYSE:CIG) was held by 13 hedge funds in the second quarter and the stakes amounted to $63.51 million. Polunin Capital is the top shareholder of the company and has a position worth nearly $30 million as of Q2.