U.S. Markets closed

5 Reasons to Hold Pattern Energy (PEGI) in Your Portfolio

Zacks Equity Research
1 / 1

New Strong Sell Stocks for November 6th

Here are 5 stocks added to the Zacks Rank #5 (Strong Sell) List today:

Estimates for Pattern Energy Group Inc. PEGI have been revised upward in the past 30 days, reflecting analysts’ optimism on the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings have moved 4% and 2.2% north to $1.57 and 46 cents per share, respectively.

Also, the Zacks Consensus Estimate for earnings in 2018 reflects a year-over-year surge of 726.3%.

Pattern Energy is an independent power company focused on production of electricity from renewable sources.  At present, the company holds interest in 24 wind and solar power projects with total owned capacity of 2,860 MW in the United States, Canada and Japan.

Let’s focus on the factors that make Pattern Energy a stock to retain for fat returns.

Price Appreciation: Shares of Pattern Energy have returned 3.9% in the past six months compared with the industry’s rise of 0.6%. The company sports a Zacks Rank #1 (Strong Buy).

VGM Score: The stock has a favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with an impressive VGM Score of A or B coupled with a top Zacks Rank offer the best investment bets.

Earnings Results & Surprise History: The company delivered earnings of 34 cents per share in second-quarter 2018, surpassing the Zacks Consensus Estimate of 8 cents by 325%. Pattern Energy’s earnings beat the consensus estimate in three of the last four quarters, the average being 310.9%.

Dividend Yield & Long-Haul Growth: A stable financial position enables Pattern Energy to raise shareholder value through regular dividend payments and share repurchases. The company’s current dividend yield is 9.22%, substantially higher than the industry’s 3.25% and the Zacks S&P 500 Composite’s increase of 1.9%. The company’s expected long-term growth stands at 29%.

Long-Term Sales Agreement: Pattern Energy remains unaffected by short-term changes in business trends. Nearly 92% of the company’s production is sourced from renewable projects, which is sold under long-term fixed power price sale agreements. The weighted average remaining contract life of the agreements is nearly 14 years as of Dec 31, 2017. Hence, these long-term power sales agreements lend a clear visibility of future earnings and provide stability to operations.

Other Stocks to Consider

Some other top-ranked stocks from the same industry are Ameren Corporation AEE, Portland General Electric Company POR and The Southern Company SO, each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren delivered an average four-quarter positive surprise of 9.76% in the last four quarters. The Zacks Consensus Estimate for 2018 EPS has been revised 1.3% upward in the past 60 days to $3.25 per share.

Portland General Electric pulled off an average four-quarter earnings surprise of 12.77% in the trailing four quarters. The consensus estimate for 2018 bottom line per share has moved 0.4% north over the past 60 days to $2.35 per share.

Southern Co. came up with an average four-quarter beat of 8.82% in the previous four quarters. The consensus mark for current-year EPS has been raised 0.7% over the past 60 days to $2.99 per share.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>