In this piece, we will take a look at the 15 worst performing utility stocks in 2023. If you want to skip out on our introduction about the utility sector and how it became quite important last year, then head on over to 5 Worst Performing Utility Stocks in 2023.
The utility industry became one of the most important sectors of the market last year due to the shock of the Russian invasion of Ukraine on global energy markets. The worst hit markets were those in Europe, which had come to rely on large amounts of Russian crude oil and even larger amounts of natural gas. As the war started, and these supplies became risky and contributed to funding the Russian war effort, Europe started to diversify its energy supply chain.
The crisis also caused energy and crude oil prices to jump to record high levels in early 2022. While naturally this was a good thing for the oil companies, especially since the petro giants such as TotalEnergies SE (NYSE:TTE) and Exxon Mobil Corporation (NYSE:XOM) made record profits, the reality is a little bit more complex since not all companies were able to earn billions of dollars in revenue from elevated oil prices. Research from economists at the Bank of Italy shows that Russia accounted for 29% of the EU’s crude and 43% of its natural gas imports in 2020 – a sizeable reliance that is not easy to break away from.
The research shows that when we take a look at two proxies for the financial performance of non-financial European companies part of STOXX Ltd.’s Eurostoxx 600 index, their equity returns drop inversely to their energy intensity while their default risk grows. Energy intensity is the extent that a firm relies on energy for its operations, for example, a large manufacturing company is likely to have a higher energy intensity than a retailing or hospitality company.
Narrowing our focus down to the utility industry, Boston Consulting Group (BCG) measured market sentiment in July 2022 when the initial shock of the invasion was at its highest and investors were looking at ways to balance the high interest rate environment with a disruption to the stock market that had hit technology and high growth stocks but boosted the prices of oil companies. Their research, dated November 2022, shows that historically, only 22% of the largest power and utility (P&U) companies had delivered higher shareholder returns than you would expect from a typical S&P 500 company. However, by July 2022, this had grown by more than three times to sit at a whopping 68% – indicating the sudden boost in the fortunes of utility companies was similar to their oil peers as both were bathing in share price growth and higher revenues.
Moving forward to the current climate, 2023 has seen energy prices stabilize which has also led to a drop in inflation in developed and advanced economies. And naturally, this slowdown in their markets has also impacted the share prices of utility companies. The S&P 500 Utilities index is down by 9.4% year to date and the Dow Jones Utility Average lags this fall by one percent since its year to date performance is negative 8.4%.
We’ve also taken a look at the biggest utility companies in the world to find out that the top three firms as of last year were PJSC Gazprom (MCX:GAZP), NextEra Energy, Inc. (NYSE:NEE), and China Yangtze Power Co Ltd (SSE:600900). As to the outlook for the rest of this year and what’s currently happening in the sector, here’s what the management of NextEra had to say during the firm’s second quarter of 2023 earnings call:
After a period of underlying commodity price inflation, supply chain disruption and trade policy risk premiums, we are finally seeing signs of stability, which will be helpful in our customer conversations. We believe renewables remain economically attractive to alternative forms of generation, and position ourselves to meet long-term customer demand by expanding our significant pipeline of renewable projects. Today, we have a pipeline of roughly 250 gigawatts of renewables and storage projects in various stages of development. This includes projects in early stage diligence in our current backlog, and is supported by roughly 145 gigawatts of interconnection queue positions. When you combine our significant competitive advantages with our renewable pipeline, we believe Energy Resources is well positioned for growth and our renewable business for years to come.
With these details in mind, let’s take a look at the worst performing utility stocks in 2023 so far, with the top ones being Via Renewables, Inc. (NASDAQ:VIA), Heliogen, Inc. (NYSE:HLGN), and Fusion Fuel Green PLC (NASDAQ:HTOO).
Photo by Max Bender on Unsplash
Our Methodology
To compile our list of the worst performing utility stocks this year, we simply compiled and ranked all utility companies by their year to date returns and listed the ten worst performing stocks right now.
Worst Performing Utility Stocks in 2023
15. Kenon Holdings Ltd. (NYSE:KEN)
Year to Date Share Price Losses: 16.73%
Kenon Holdings Ltd. (NYSE:KEN) is a global independent power producer (IPP) that is headquartered in Singapore. Its first quarter results saw the firm’s revenue stay relatively flat as a drop in Israeli sales was countered by a growth in American revenue.
Insider Monkey’s first quarter of 2023 survey covering 943 hedge funds revealed that three had held a stake in the company. Kenon Holdings Ltd. (NYSE:KEN)’s largest shareholder is Jim Simons’ Renaissance Technologies with an investment of $1 million.
Along with Heliogen, Inc. (NYSE:HLGN), Via Renewables, Inc. (NASDAQ:VIA), and Fusion Fuel Green PLC (NASDAQ:HTOO), Kenon Holdings Ltd. (NYSE:KEN) is one of the worst performing utility stocks this year.
14. Montauk Renewables, Inc. (NASDAQ:MNTK)
Year to Date Share Price Losses: 19.66%
Montauk Renewables, Inc. (NASDAQ:MNTK) is a renewable energy firm that uses bio gas to generate electricity. The firm expanded its operations in June after it announced a new bio gas plant in California.
By the end of March 2023, nine of the 943 hedge funds part of Insider Monkey’s database had bought Montauk Renewables, Inc. (NASDAQ:MNTK)’s shares. The firm’s biggest hedge fund shareholder is Jim Simons’ Renaissance Technologies with a $2.4 million stake.
13. Eversource Energy (NYSE:ES)
Year to Date Share Price Losses: 20.16%
Eversource Energy (NYSE:ES) is an American firm that sells electricity and natural gas to nearly a quarter of a million people. The firm beat second quarter analyst EPS estimates and the shares are rated Buy on average.
During 2023’s March quarter, 29 of the 943 hedge funds part of Insider Monkey’s database had held a stake in the firm. Eversource Energy (NYSE:ES)’s largest shareholder is Stuart J. Zimmer’s Zimmer Partners with an investment of $136 million.
12. New Fortress Energy Inc. (NASDAQ:NFE)
Year to Date Share Price Losses: 21.95%
New Fortress Energy Inc. (NASDAQ:NFE) is a liquefied natural gas company that procures natural gas and converts it into LNG to sell to customers and generate power. The stock is rated Strong Buy on average.
Insider Monkey’s first quarter of 2023 survey covering 943 hedge funds revealed that 28 had bought a stake in the company. New Fortress Energy Inc. (NASDAQ:NFE)’s largest shareholder is Michael Novogratz’s Fortress Investment Group with a $394 million investment.
11. Clearway Energy, Inc. (NYSE:CWEN)
Year to Date Share Price Losses: 22.17%
Clearway Energy, Inc. (NYSE:CWEN) is an electricity generation company with close to 8,000 megawatts of power generation capacity. The shares have been on a downward spiral this year, and its recent announcement of a drop in wind power generation did not help in reversing the trend.
Insider Monkey sifted through 943 hedge funds for their March quarter of 2023 shareholdings to find out that 25 had bought a stake in the company. Jim Simons’ Renaissance Technologies is Clearway Energy, Inc. (NYSE:CWEN)’s largest shareholder through a $30 million stake.
10. Artesian Resources Corporation (NASDAQ:ARTNA)
Year to Date Share Price Losses: 23.21%
Artesian Resources Corporation (NASDAQ:ARTNA) is a water company that operates in three U.S. states. The stock is not covered by a lot of analysts, and its shares fell by quite a bit earlier this year after it announced a public offering of its shares.
After digging through 943 hedge funds for their Q1 2023 investments, Insider Monkey discovered that four had invested in Artesian Resources Corporation (NASDAQ:ARTNA). Out of these, Jim Simons’ Renaissance Technologies is the largest shareholder with a $16.3 million investment.
10. NextEra Energy Partners, LP (NYSE:NEP)
Year to Date Share Price Losses: 28.60%
NextEra Energy Partners, LP (NYSE:NEP) is an American firm that uses solar, wind, and other renewable energy generation technologies. The firm has been facing a tough industry as of late since it has missed analyst EPS estimates in three of its four latest quarters.
As of March 2023, 24 of the 943 hedge funds part of Insider Monkey’s research had held NextEra Energy Partners, LP (NYSE:NEP)’s shares.
9. The AES Corporation (NYSE:AES)
Year to Date Share Price Losses: 30.13%
The AES Corporation (NYSE:AES) is one of the larger companies on our list with tens of thousands of megawatts of power generation capacity and a global operations base. The stock is rated Buy on average and the firm missed analyst EPS estimates for Q2 earnings.
44 of the 943 hedge funds profiled by Insider Monkey for their Q1 2023 shareholdings had invested in the firm. Out of these, The AES Corporation (NYSE:AES)’s largest investor is William B. Gray’s Orbis Investment Management since it owns 17.9 million shares that are worth $432 million.
8. UGI Corporation (NYSE:UGI)
Year to Date Share Price Losses: 35.80%
UGI Corporation (NYSE:UGI) is another gas company that serves millions of households and industrial customers. It missed second quarter earnings estimates by a hairline and most of its shares are owned by institutional investors.
By the end of this year’s first quarter, 20 of the 943 hedge funds surveyed by Insider Monkey had held UGI Corporation (NYSE:UGI)’s shares. Jean-Marie Eveillard’s First Eagle Investment Management is the firm’s largest hedge fund shareholder through a $256 million investment.
7. Brenmiller Energy Ltd (NASDAQ:BNRG)
Year to Date Share Price Losses: 47.52%
Brenmiller Energy Ltd (NASDAQ:BNRG) is a steam company whose products generate steam to power up turbines. The firm upgraded its product portfolio in August as it announced a new sustainable energy generation system.
During Q1 2023, only one of the 943 hedge funds part of Insider Monkey’s database had invested in Brenmiller Energy Ltd (NASDAQ:BNRG).
Via Renewables, Inc. (NASDAQ:VIA), Brenmiller Energy Ltd (NASDAQ:BNRG), Heliogen, Inc. (NYSE:HLGN), and Fusion Fuel Green PLC (NASDAQ:HTOO) are some utility stocks that have performed poorly in 2023.
Click to continue reading and see 5 Worst Performing Utility Stocks in 2023.
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Disclosure: None. 15 Worst Performing Utility Stocks in 2023 is originally published on Insider Monkey.