In this article, we will take a look at the 5 most undervalued utility stocks to buy according to hedge funds. To see more such companies, go directly to 10 Most Undervalued Utility Stocks To Buy According To Hedge Funds.
5. FirstEnergy Corp. (NYSE:FE)
PE Ratio as of January 26: 18.70
FirstEnergy Corp. (NYSE:FE) is one of the most popular undervalued utilities stocks among the elite hedge funds tracked by Insider Monkey. 41 out of the 920 funds in Insider Monkey database reported having stakes in FirstEnergy Corp. (NYSE:FE) as of the end of the third quarter of 2022. The biggest stakeholder of FirstEnergy Corp. (NYSE:FE) was Carl Icahn’s Icahn Capital LP which owns a $702 million stake in FirstEnergy Corp. (NYSE:FE). Another notable stakeholder in FirstEnergy Corp. (NYSE:FE) was Ken Griffin’s Citadel Investment Group, which had a $194 million stake.
In December, FirstEnergy Corp. (NYSE:FE) declared a quarterly dividend of $0.39 per share quarterly dividend. Forward dividend yield at the time came in at 3.69%. The dividend is payable on March 1 for shareholders of record as of February 7.
4. Avangrid, Inc. (NYSE:AGR)
PE Ratio as of January 26: 18.13
Avangrid, Inc. (NYSE:AGR) is a Connecticut-based utility company that is powering millions of homes in the US. Avangrid, Inc. (NYSE:AGR)’s dividend yield stands at over 4% as of January 26. In October 2022, Mizuho analyst Paul Fremont upped his price target for Avangrid, Inc. (NYSE:AGR) to $41 from $ and kept a Neutral rating on Avangrid, Inc. (NYSE:AGR). The analyst set a Neutral rating on the shares. The analyst at the time said that he is hopeful that Avangrid, Inc. (NYSE:AGR)’s negotiations with Connecticut and Massachusetts for higher prices for its Commonwealth and Park City offshore wind projects will be successful.
As of the end of the third quarter, 16 hedge funds tracked by Insider Monkey reported having stakes in Avangrid, Inc. (NYSE:AGR), compared to 17 funds in the previous quarter. The total value of these stakes was about $96 million. The biggest stakeholder in Avangrid, Inc. (NYSE:AGR) as of the end of the September quarter of 2022 was Paul Marshall and Ian Wace’s Marshall Wace LLP, which had a $22 million stake in Avangrid, Inc. (NYSE:AGR).
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3. NiSource Inc. (NYSE:NI)
PE Ratio as of January 26: 17.92
NiSource Inc. (NYSE:NI) is an Indiana-based utility company that serves millions of natural gas and electricity customers in the US. In November, NiSource Inc. (NYSE:NI) posted its third quarter results. NiSource Inc. (NYSE:NI)’s adjusted EPS in the period came in at $0.10, in-line with estimates. However, NiSource Inc. (NYSE:NI) narrowed its 2022 adjusted net operating earnings per share (NOEPS) guidance to $1.44 to $1.46 versus the consensus estimate of $1.45. NiSource Inc. (NYSE:NI) also gave 2023 guidance of $1.50 to $1.57 non-GAAP diluted NOEPS vs. consensus of $1.55.
Hedge fund sentiment for NiSource Inc. (NYSE:NI) saw a huge jump in the third quarter. A total of 32 hedge funds tracked by Insider Monkey reported owning stakes in NiSource Inc. (NYSE:NI) as of the end of the period, compared to 23 funds that had stakes in NiSource Inc. (NYSE:NI) at the conclusion of the second quarter of 2022.
2. Entergy Corporation (NYSE:ETR)
PE Ratio as of January 26: 17.47
Entergy Corporation (NYSE:ETR) ranks 2nd in our list of the most undervalued utility stocks to buy according to hedge funds. Of the 920 hedge funds tracked by Insider Monkey as of the end of the third quarter, 31 funds had stakes in Entergy Corporation (NYSE:ETR). The biggest stakeholder of Entergy Corporation (NYSE:ETR) was Israel Englander’s Millennium Management with an $88.4 million stake. The second biggest stakeholder in Entergy Corporation (NYSE:ETR) was Michael Gelband’s ExodusPoint Capital which reported owning a $60 million stake in Entergy Corporation (NYSE:ETR).
In November, Entergy Corporation (NYSE:ETR) posted its third-quarter results. Entergy Corporation (NYSE:ETR)’s adjusted EPS in the period came in at $2.48, beating estimates by $0.19. However, Entergy Corporation (NYSE:ETR) narrowed its 2022 adjusted EPS forecast to the range of $6.25 to $6.45 versus the consensus of $6.38. Previous guidance was $6.15 to $6.45.
1. National Grid plc (NYSE:NGG)
PE Ratio as of January 26: 12.14
National Grid plc (NYSE:NGG) is a British multinational electricity and gas utility company headquartered in London, England. National Grid plc (NYSE:NGG) has a PE ratio of 12.11 as of January 26. National Grid plc (NYSE:NGG) has a dividend yield of over 4%. A total of 14 hedge funds tracked by Insider Monkey have stakes in National Grid plc (NYSE:NGG).
Here is what ClearBridge Investments has to say about National Grid plc (NYSE:NGG) in its Q2 2021 investor letter:
“In Western Europe, U.K. electric utility National Grid contributed the most. National Grid is one of the world’s largest publicly owned utilities, focused on transmission and distribution activities in electricity and gas. It owns and operates regulated electricity and gas network assets in both the U.K. and the U.S., which contribute about 95% of its earnings and equity value. National Grid’s share price increased during the quarter following the announcement of its agreement to acquire WPD, a group of U.K. electricity distribution businesses, and sell part of its U.S. assets. It also announced its intention to dispose of a majority stake in its U.K. gas transmission business.”
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