UBS’ Best Stocks In The AI, Growth & Low Rates Era: Top 29 US Stocks

10. Sempra (NYSE:SRE)

Number of Hedge Fund Investors In Q2 2024: 29

UBS’ Sector Rating: Attractive

Sector: Utilities

Sempra (NYSE:SRE) is one of the largest electricity and gas utilities in Texas and California. The firm serves the needs of more than 40 million customers across California and Texas. This provides it exposure to two of the richest states in America, and Sempra (NYSE:SRE) also benefits from the fact that it has a presence in the rapidly growing liquefied natural gas (LNG) industry. As of now, the firm is engaged in crucial regulatory negotiations in California through which it aims to set new rates and bring return on equity at par with market conditions. A preliminary decision earlier this year announced $1.6 billion in rate relief. Sempra (NYSE:SRE) is also developing hydrogen and clean energy facilities in California, which could unlock catalysts for the firm, particularly from AI data centers.

Sempra’s (NYSE:SRE) management also shared details about its LNG plans during the Q2 2024 earnings call. Here is what they said:

“At ECA LNG Phase 1, we are roughly 85% complete. However, our contractor has experienced labor retention and productivity issues in recent months. As a result, our commercial operations date will be delayed until the spring of 2026. We are actively engaged with our contractor to advance the project, and we’ll see increased capital expenditures for the project in the form of additional carrying costs and lower estimated commissioning revenues, which are based on forward price curves. Despite the delay of potential changes in capital, we still expect to maintain strong integrated financial returns, consistent with our original forecast at the time that we took FID in 2020. This is the result of a combination of factors, including optimization opportunities, stronger LNG demand over the long-term and inflation protection within the SPAs. Moving to Port Arthur LNG, we’re making steady progress on Phase I.”