PG&E Corporation (PCG): A Bull Case Theory

We came across a bullish thesis on PG&E Corporation (PCG) on Value Investing Subreddit Page by Badger_Outside. In this article, we will summarize the bulls’ thesis on PCG. PG&E Corporation (PCG)’s share was trading at $16.29 as of Jan 27^th. PCG’s trailing and forward P/E were 12.92 and 11.12 respectively according to Yahoo Finance.

A utility employee connecting wires at a power station in order to distribute electricity to customers.

The recent California wildfires caused a temporary decline in several utility stocks, with PG&E (PCG) emerging as an attractive buy. Unlike Edison International (EIX), which is directly impacted by the fires in Northern and Central California, PCG is not located in the affected areas, reducing its exposure to immediate risks. Additionally, the California Wildfire Fund, with a $21 billion reserve, is expected to cover the losses from the fires, providing short-term de-risking for PCG. The recent rainfall should also help contain the fires, offering further support. Looking ahead, the changing political landscape in California, with growing Republican influence, could lead to policy changes that address issues like insufficient funding for firefighters and water diversion, which have contributed to the frequency of fires. This shift, along with efforts to speed up rebuilding using prefabricated homes, should help restore normalcy more quickly. A potential overhaul of insurance pricing, addressing the current inefficiencies in premium distribution, is also likely. In the long term, as California continues to lead the AI boom, electricity demand is expected to rise, benefiting public utilities such as PCG. Given these factors, there is significant upside potential for PCG, making it an appealing investment.

PG&E Corporation (PCG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held PCG at the end of the third quarter which was 46 in the previous quarter. While we acknowledge the risk and potential of PCG as an investment, our conviction lies in the belief that some 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 PCG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.