We recently compiled a list of the 10 Worst Performing Utility Stocks in 2024. In this article, we are going to take a look at where Hawaiian Electric Industries (NYSE:HE) stands against the other utility stocks.
Man of the hour, CEO Jensen Huang at the Bipartisan Policy Center on September 27, emphasized the crucial role of artificial intelligence (AI) in transforming the energy and utilities sector. According to Huang, AI has the potential to revolutionize the way energy is produced, distributed, and consumed, leading to significant economic and environmental benefits.
Huang highlighted the importance of accelerating the development and deployment of AI in the energy sector, citing examples such as smart grids, energy storage, and renewable energy integration. He noted that AI can help optimize energy distribution, predict energy demand, and identify areas of inefficiency in the grid. For instance, a study by the National Renewable Energy Laboratory (NREL) found that AI can help reduce energy waste by up to 15% by optimizing energy consumption in buildings and homes.
Huang also emphasized the need for a more efficient and resilient energy system, citing the growing demand for electricity and the increasing complexity of the grid. He argued that AI can help address these challenges by providing real-time monitoring and control, predictive maintenance, and advanced analytics. For example, a study by the Electric Power Research Institute (EPRI) found that AI can help reduce the frequency and duration of power outages by up to 50%.
Huang also highlighted the potential for AI to enable new business models and revenue streams in the energy sector, such as peer-to-peer energy trading and community-based energy sharing. For example, a study by the University of California, Berkeley found that peer-to-peer energy trading can help reduce energy costs by up to 20% and increase the adoption of renewable energy by up to 30%.
In terms of energy consumption, Huang noted that AI can help optimize energy usage in buildings, homes, and industries, leading to significant reductions in energy waste and greenhouse gas emissions. According to the U.S. Energy Information Administration (EIA), buildings account for approximately 40% of energy consumption in the United States, and industries account for approximately 30%. AI can help optimize energy consumption in these sectors by identifying areas of inefficiency and providing real-time feedback on energy usage.
In terms of policy, Huang argued that regulatory frameworks should support the development and deployment of AI in the energy sector. He called for increased investment in research and development, as well as workforce training and education programs to ensure that the energy sector has the necessary skills to adopt and deploy AI technologies.
Additionally, Huang emphasized the need for open standards and interoperability protocols to facilitate the integration of AI technologies in the energy sector. He noted that the development of open standards and interoperability protocols can help ensure that AI technologies are compatible with existing energy infrastructure, and can help facilitate the sharing of data and best practices across the industry.
AI has significant potential to transform the energy and utilities sector, leading to increased efficiency, reduced waste, and a more sustainable future. As the energy sector continues to evolve and grow, it is clear that AI will play a critical role in shaping its future, with that in context, let’s take a look at the 10 worst performing utility stocks in 2024.
Our Methodology
To compile our list of the 10 worst performing utility stocks in 2024, we used the Finviz and Yahoo stock screeners to find stocks that have experienced the most significant decline on a year-to-date basis and have a market cap of more than $500 million as of October 15. We then narrowed our choices to 10 stocks with the worst year-to-date performance. We also included their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in descending order of their year-to-date performance as of October 15.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 smallcap and largecap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An engineer standing in front of a detailed control panel with the logo of the electric utility in the background, highlighting the innovation and technical expertise of the company.
Hawaiian Electric Industries (NYSE:HE)
YTD Performance as of October 15: -28.82%
Market Cap as of October 15: $1.79 Billion
Number of Hedge Fund Investors: 21
Hawaiian Electric Industries (NYSE:HE) is the largest supplier of electricity in Hawaii, serving 95% of the state’s residents. The company is actively working toward transitioning its energy grid to rely more on renewable resources, such as solar and wind, to reduce its carbon footprint and align with the state’s renewable energy goals.
On September 25, Hawaiian Electric Industries (NYSE:HE) announced that it had successfully closed an offering of newly issued shares of its common stock, raising approximately $558 million in net proceeds. The offering, which was priced at $9.25 per share, is a significant step towards pre-funding, which is an expected contribution to the Maui wildfire litigation settlement. As announced earlier, Hawaiian Electric Industries’ (NYSE:HE) total payment obligation under the proposed global settlement is $1.91 billion, to be paid in four equal annual installments. The company’s first settlement payment of approximately $478 million is expected to be due no sooner than mid-2025.
Hawaii’s lack of preparedness and response to wildfires is a major concern. The state has not implemented measures such as power shut-offs during heat waves and windy periods, and its vegetative management program is underfunded and under-addressed. The Fire Research Safety Institute report on Hawaii urged the implementation of these measures, as well as the undergrounding of power lines in high-risk areas.
Hawaiian Electric Industries (NYSE:HE) is offering equity to address its financial obligations related to the settlement. By securing this financing ahead of schedule, the company is demonstrating its ability to deliver on its commitments and make progress towards resolving the going concern assessment disclosed in August 2023. The settlement, which is still in the final stages of negotiation, is expected to be signed and finalized soon, pending judicial review and approval. Once the settlement is finalized, Hawaiian Electric Industries (NYSE:HE) will have a clear path forward to resolve its obligations and move forward with its business operations.
Overall HE ranks 4th on our list of the worst performing utility stocks in 2024. While we acknowledge the potential of HE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
