6. The AES Corporation (NYSE:AES)
Share Price: $19.13
Number of Hedge Fund Holders: 46
Data Centers and artificial intelligence require a huge amount of energy to function, if these industries rely on traditional energy sources the risk for adverse climate effects increases. The solution to this problem is energy generation through renewable energy sources.
If you are looking to invest in a company that is making this happen and has the potential to grow with the high growth of AI and Data Centers, you might want to consider looking into The AES Corporation (NYSE:AES).
It is an energy company that focuses on generating electricity mainly from renewable sources of energy. As per the company’s second quarter 2024 factsheet, it generated 35,632 Gross MW in operation, out of which around 56% of the electricity came from renewable technologies. The company also operates Utilities that provide electricity to customers in strategically critical areas including Indiana, Ohio, and El Salvador.
There have been significant developments during the second quarter for The AES Corporation (NYSE:AES). The company expanded its partnership with Google, signing a 727 MW of hybrid wind and solar Power Purchase Agreements (PPAs). This will allow the company to expand into Texas as well as meet the electricity demand for Google’s data centers. Moreover, it also signed a 310 MW retail supply agreement with Google again for its data centers in Ohio.
While these nascent contracts with Google are impressive however, what’s more interesting is its overall growing backlog of long-term contracts which now stands at 12.6 gigawatts.
This topped with the fact that the stock was held by 46 institutional holders in the second quarter makes it one of the best stocks under $20 to invest in now.
Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2023 investor letter:
“Given interest rates’ elevated state, it is perhaps unsurprising that our utility exposure has fared poorly for us this year. We should have hedged the exposure sooner with a Utility ETF short, but we did not do that until the third quarter, after much of the damage was already done. As noted above, our Utility exposure is second only to our materials exposure in terms of negative impact on the portfolio across both the third quarter and the YTD periods. This is primarily driven by our investment in The AES Corporation (NYSE:AES), which was down roughly 26% in the third quarter and 47% YTD. Our other utility exposure is up for the year, including our short position, which, as noted, was put on in the third quarter, and it is probably something we should have had on the books for the entire year.
We attribute, for right or wrong, the entirety of the sell-off in AES to the interest rate environment. Chart overlays are always tricky, so one should not read too much into them, but as a quick sense check of the claim, if one inverts the move-in rates for a generic 10-year US government bond and overlay it with AES stock price YTD, you get the following:..” (Click here to read the full text)
