AES stays strong

AES (AES), one of the top gainers among utilities last year, has continued its upward march. This year, AES stock has risen more than 25%, significantly outperforming broader utilities. Its better-than-expected earnings and favorable commentary by the company’s management have boosted investors’ confidence lately, as indicated by its market performance.

With AES stock trading close to a decade high, investors must be wondering if the stock has any steam left. In this series, we’ll look at its earnings growth, valuation, and outlook.

What Led to AES’s Rally and Where It Could Go from Here

Top gainer

As shown in the chart above, which shows movement by AES, the Utilities Select Sector SPDR ETF (XLU), and broader markets, AES’s rally started in early Q2 2018. It has surged ~70% over the past year, while XLU has risen ~15%. Merchant power player NRG Energy (NRG) has risen 38%.

AES obtains a large portion of its earnings from competitive operations, making its earnings less stable. Its presence in 15 countries also makes its earnings susceptible to currency risk, unlike domestic regulated utilities.

Over the past few years, AES has exited several countries to streamline its operations. With operations in fewer countries, AES seems to have improved its business mix, which could bode well for its long-term earnings growth.

Latest articles

23 May

Trade War Subdues Manufacturing PMIs around the World

WRITTEN BY Mayur Sontakke, CFA, FRM

Today, IHS Markit published its purchasing managers' indexes or PMIs for May countries around the world.

Best Buy (BBY) reported better-than-expected earnings for the first quarter of fiscal 2020, which ended on May 4.

23 May

Why Apple Stock Is Down 2.7% Today

WRITTEN BY John Parker

On May 23 at 12:46 PM EDT, Apple (AAPL) was trading at $179.12 with a 2.0% loss for the day.

The CBOE Volatility Index has been sitting at very low levels for most of 2019.

23 May

Cannabis Stocks Fell Due to Trade Fears

WRITTEN BY Adam Jones

On May 23, CannTrust (CTST) was trading nearly 4.1% lower, while Cronos Group (CRON) fell 3.3%.

US equity markets are in the red today amid the escalation in the US-China trade war.

172.31.16.229