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

9. Entergy (NYSE:ETR)

Number of Hedge Fund Investors In Q2 2024: 63

UBS’ Sector Rating: Attractive

Sector: Utilities

Entergy (NYSE:ETR) is a Louisiana-based utility company. It has more than 24 GW of power generation capacity in its portfolio and relies on clean and traditional sources to generate power. Since Entergy (NYSE:ETR) is a regulated utility, the firm has the advantage of locked-in rates that prevent it from lowering rates during periods of demand. Yet, on the flip side, this also leaves the firm at the mercy of regulators whose approved rates might make it difficult to maintain margins. On this front, Entergy (NYSE:ETR) scored a win in 2024 when it secured an extension from the Louisiana Public Service Commission (LPSC) for its fixed-rate plan extension. This should improve the firm’s operating outlook in the state by allowing it to invest in the grid. Additionally, Entergy (NYSE:ETR) has made inroads into the data center industry by signing a deal with Amazon to provide data center power in Mississippi. The clearer regulatory outlook and data center inroads have helped the shares which are up 30.9% year to date.

Entergy (NYSE:ETR) has been busy setting rates and working with regulators in other states as well. Here’s what management shared during the Q2 2024 earnings call:

“We continue to work well with the Mississippi Commission to achieve good outcomes that support our customers and the operating company’s credit, which puts Entergy Mississippi in a strong position to bring additional growth to the state which benefits all stakeholders. In addition, Entergy New Orleans and Entergy Arkansas filed their annual FRP.

We expect new rates to be in effect in September for New Orleans and January for Arkansas. And finally, our gas LDC sale continues to move along. For Entergy Louisiana, the staff report and recommendation was filed on Tuesday of this week, stating that staff believe the transaction is in the public interest subject to customary conditions. We believe the matter will be taken up by the LPSC on August 14 at its business and executive meeting. For Entergy New Orleans, the hearing is scheduled to begin on September 9, and we expect a decision from the City Council in early 2025. We remain on track to close the transaction by the third quarter of 2025.”