The energy market has been witnessing immense volatility due to the increasing possibility of an economic slowdown and tight supply caused by the ban on Russian energy. According to the Energy Information Administration (EIA), volatility in oil prices is likely to continue.
Oil prices rose nearly $2 on Monday, bolstered by supply fears, a dip in the U.S. dollar, and Biden’s failure to ensure an increase in oil supply from the middle-east. Brent crude futures for September were up 1.9%, while WTI crude futures rose 2.1%.
Russia recently tightened its gas squeeze on Europe. "Higher gas prices, triggered by Russia's gas squeeze, could lead to additional switching to crude from gas and support oil prices," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
He added, “A tug-of-war between concerns about weakening demand due to the economic slowdown amid rising U.S. interest rates and fears of supply risk because of prolonged Russia-Ukraine conflict will likely continue for some time.” The market sentiments have been swaying between the concerns about the supply-side instability and the expectations for weaker fuel demand.
Given this backdrop, fundamentally strong energy stocks Via Renewables, Inc. (VIA), Genie Energy Ltd. (GNE), FirstEnergy Corp. (FE), and Otter Tail Corporation (OTTR) might be solid additions to one’s portfolio this year.
Via Renewables, Inc. (VIA)
VIA operates as an independent retail energy services company that offers residential and commercial customers in the United States a choice for their natural gas and electricity. Its business comprises two operating segments: Retail Electricity Segment and Retail Natural Gas.
On July 5, 2022, VIA announced the closure of a new three-year $195 million senior secured borrowing base credit facility to replace its existing credit facility. This additional cash could help the company invest in upcoming growth opportunities and acquisitions.
VIA’s revenue for the fiscal first quarter ended March 31, 2022, increased 12.5% year-over-year to $127.15 million. The company’s operating income improved 237.5% year-over-year to $38.33 million, while its net income increased 212.6% from the year-ago value to $31.03 million. Also, its net income per share came in at $0.70, up 206.1% year-over-year.
Over the past month, the stock has gained 7.9% year-to-date to close the last trading session at $7.85.
VIA’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of B, translating to a Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Momentum. It is ranked #5 out of 67 stocks in the Utilities - Domestic industry. Click here to see the other ratings of VIA for Growth, Stability, Sentiment, and Quality.
Genie Energy Ltd. (GNE)
GNE and its subsidiaries supply electricity and natural gas to residential and small business customers internationally. It has three operational segments: Genie Retail Energy (GRE), GRE International, and Genie Renewables.
On July 25, 2022, Genie Renewables, a division of GNE, announced the launch of Sunlight Energy, an investment vehicle structured to generate stable, predictable returns for participants through ownership of both Genie Renewables-originated solar generation projects and projects developed by third parties.
Nir Ashpiz, chief executive officer of Sunlight Energy, said, “Sunlight Energy will seek to structure project participation to provide investors with attractive and stable cash-flows while diversifying project-based risks. Our strong financial position will enable us to invest in promising projects, including early-stage opportunities developed independently of Genie.”
For the fiscal first quarter ended March 31, 2022, GNE’s gross profit increased 259.9% year-over-year to $45.54 million. The company’s income from operations improved 547.1% year-over-year to $24.43 million. Also, its net income increased 843.6% year-over-year to $17.52 million. In addition, its EPS increased 844.4% year-over-year to $0.67.
GNE has gained 83% over the past six months to close the last trading session at $9.15.
GNE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. Within the Utilities - Domestic industry, it is ranked first. Click here to see GNE’s Stability rating.
FirstEnergy Corp. (FE)
FE is engaged in the transmission, distribution, and generation of electricity in the United States. The company operates through two segments: Regulated Distribution and Regulated Transmission. It owns and operates coal-fired, nuclear, hydroelectric, natural gas, wind, and solar power generating facilities.
On July 18, 2022, FE’s Ohio utilities filed a plan with the Public Utilities Commission of Ohio (PUCO) to expand investments in smart grid technology, including equipment to help reduce the frequency and duration of power outages for customers. This proposed plan is expected to enhance service reliability across the company’s service area in Ohio.
FE’s total revenues increased 9.6% year-over-year to $2.99 billion for the first quarter ended March 31, 2022. The company’s net income and non-GAAP EPS came in at $288 million and $0.60, respectively. Also, its operating income was flat year-over-year to $559 million.
Analysts expect FE’s EPS for fiscal 2023 to increase 5.8% year-over-year to $2.54. Its revenue for the quarter ended June 30, 2022, is expected to increase 4% year-over-year to $2.73 billion. Over the past month, the stock has gained 3.5% to close the last trading session at $38.62.
FE’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Momentum. Again, it is ranked #6 in the same industry. Click here to see the other ratings of FE for Value, Stability, Sentiment, and Quality.
Otter Tail Corporation (OTTR)
OTTR and its subsidiaries engage in diversified operations like electric utility, manufacturing, and plastic pipe businesses in the United States. Its segments are Electric, Manufacturing, and Plastics.
On May 2, 2022, President and CEO Chuck MacFarlane said, “We continue to make progress on the development of Otter Tail Power’s 49.9 MW Hoot Lake Solar project, which will be constructed on and near the retired Hoot Lake Plant property in Fergus Falls, Minnesota. The project is expected to be completed in 2023 and has received renewable rider eligibility approval in Minnesota.”
For the fiscal first quarter ended March 31, 2022, OTTR’s total operating revenues increased 43.3% year-over-year to $374.90 million. Its operating income grew 122.4% from the year-ago value to $98.30 million. The company’s net income increased 137.4% year-over-year to $72 million. Also, its EPS came in at $1.72, representing an increase of 135.6% year-over-year.
For the quarter ended June 30, 2022, OTTR’s EPS and revenue are expected to increase 53.2% and 17.9% year-over-year to $1.55 and $336.87 million, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 33.6% to close the last trading session at $66.40.
OTTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has a B grade for Growth, Stability, Sentiment, and Quality. Within the Utilities - Domestic industry, it is ranked #2. To see the other ratings of OTTR for Value and Momentum, click here.
VIA shares were unchanged in premarket trading Tuesday. Year-to-date, VIA has declined -28.74%, versus a -16.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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