5 Best Utility Stocks to Buy Now

Ohio-based FirstEnergy operates ten electric utility operating companies. one of which is amongst the country’s biggest investor-owned utilities and serves 6 million customers in Ohio, Pennsylvania, West Virginia, Virginia, Maryland, New Jersey and New York.

FirstEnergy in November 2020 pledged to go carbon free by 2050, while cutting greenhouse gas emissions by 30% by 2030.  In the third quarter, FirstEnergy posted better-than-expected  Q3 results and said it continues to expect operating EPS of $2.40-$2.60, versus the Street’s consensus of $2.50.

Hedge fund sentiment for FirstEnergy improved significantly in the third quarter, as 58 hedge funds tracked by Insider Monkey ended the period with stakes in the company, up from 41 funds a quarter earlier. Here is what Heartland Advisors recently said about FE:

“The portfolio’s Utility names lagged on a relative basis with the shortfall stemming from a stock-specific issue in the group. FirstEnergy (FE) is a business we’ve owned in the past and sold out of after shares had appreciated following its successful transition to a pure regulated utility through the divestiture of its merchant power unit.

We initiated a new stake in FirstEnergy in March after shares sold off due to concerns that the recession would have an outsized impact on the company’s industrial-oriented client base. Similar to our successful experience in the past, we felt that the company was attractive given its meaningful discount to its peers.

Subsequent to our investment, FirstEnergy was named in an investigation related to $60 million of payments made by the merchant power entity to Ohio politicians. Our initial reaction when news broke was to reduce our exposure to the company, however, we continued our due diligence on the matter and believe that market reaction overestimated the likely fallout from the investigation.

As shares fell in price, we added to our position in the belief that as the matter proceeds, some of the clouds casting a shadow on the business will subside.”