At Zacks, we understand the importance of discovering undervalued investments for our customers. Many investors constantly seek stocks that not only maintain stability, but produce respectable returns for its shareholders. Luckily, alongside the Zacks Rank, we can use our Style Scores System to search for stocks with an “A” grade in Value.
Various utility stocks are known to be suited for risk-averse investors, as they normally lack certain risks that affect the rest of the market. However, we can use the Zacks Stock Screener to search for undervalued stocks that are projected to beat the market and in turn, increase returns for shareholders.
Check out these 5 strong value utility stocks now:
1. Atlantic Power Corporation AT
Atlantic Power Corporation is an independent electric power producer that owns a diversified portfolio of independent, non-utility power generation projects. Atlantic Power currently owns “A” grades for Value and Growth. Basically, we believe that not only is the company undervalued, but it could also slowly outperform the market while the firm continues to develop and expand. Atlantic Power’s projected sales growth sits at 19.54%, which towers over the industry average of 0.78%.
Also, Atlantic Power’s Current Ratio presently stands at 1.10. This means that Atlantic Power possesses more assets than liabilities, and the firm is expected to be able to pay off its short term debt. Additionally, the company is expected to post a whopping EPS Growth rate of 148.33% this year. Atlantic Power Corporation currently holds a Zacks Rank #2 (Buy).
2. Pattern Energy Group Inc. PEGI
Pattern Energy Group is a premium power company that engages in developing, constructing, owning and operating wind power. Pattern Energy has demolished its earnings estimates projections in each of the past four quarters by an average of 113.64%. As of 60 days ago, the company’s full-year EPS estimates have increased by a massive 87.50%. Furthermore, Pattern Energy Group’s share price has increased by 24.55% over the past twelve weeks.
The firm’s positive trend is expected to continue, as Pattern Energy’s Current Cash Flow Growth stands at 39.60%. This means that the company is considered financially healthy and is expected to be able to cover its interest payments to bondholders. Finally, Pattern Energy Group believes in rewarding its shareholders by paying a strong 6.57% dividend. Pattern Energy sports a Zacks Rank #1 (Strong Buy).
3. Huaneng Power International, Inc. HNP
Huaneng Power International develops, constructs, owns and operates large coal-fired power plants throughout China. Huaneng Power currently possesses “A” grades in Value and Momentum. In essence, we believe that this stock is both undervalued and attractive to momentum-focused investors looking for new highs. Huaneng Power sports a beta rating of 0.81, which means that this investment is considered to be less volatile. Nevertheless, the company pays its shareholders an incredible 14.04% dividend.
Huaneng Power’s Cash Flow per Share sits at $9.19, which compares favorably to the industry average of $3.59. This means that the company is utilizing its shareholders equity in a much more effective manner than its competitors. Additionally, the firm sports a remarkable EV/EBITDA of 4.87. Huaneng Power International has recently been promoted to a Zacks Rank #2 (Buy).
4. RWE AG RWEOY
RWE AG is among Europe’s five largest utility companies and is active in the generation, transmission, sale, and trading of electricity and gas. RWE features an “A” grade for Value and Momentum. RWE currently has a P/E ratio of 9.55 and an Earnings Yield of 10.04%, both of which compare favorably to the industry.
Also, RWE sports a Cash/Price ratio of 72.3, which towers over the industry average of 10.55. Finally, RWE holds an impressive Price/Sales ratio of 0.23. Basically, the investor would be spending $0.23 for every $1 the company makes in sales, which means that this stock possesses strong value for its shareholders. RWE AG currently has a Zacks Rank #1 (Strong Buy).
5. Veolia Environnment SA VEOEY
Veolia is the only global company to offer the entire range of environmental services in the water, waste management, energy, and transportation sectors. This company currently holds an “A” grade for Value and VGM, while paying a respectable 3.30% dividend. Veolia also possesses an EV/EBITDA of 4.95, which is superb for a utilities company. Veolia currently possesses a RoE of 11.24% and Current Cash Flow Growth of 23.20%, both of which compare favorably to their industry averages of 9.69% and 5.25%.
As of 60 days ago, Veolia’s full-year EPS estimates have increased by 11.93% to $1.22. Additionally, Veolia’s share price has increased 14.90% over the past twelve weeks, even though it has earned a beta rating of 0.58. Thus, now might be the perfect time to purchase shares of Veolia Environnment. Veolia was recently promoted to a Zacks Rank #1 (Strong Buy).
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