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The Canadian utilities sector noted a rebound after the first wave of the COVID-19 pandemic. The sector’s centrality to the country’s growth is likely to generate higher returns for investors, particularly in 2021, as per some industry experts.
On that note, let’s explore two utility stocks, one operating in the electrical power transmission sector, and another in the water sewage management industry.
AltaGas Ltd (TSX:ALA)
AltaGas Ltd, an energy infrastructure player, is one of the top performers in the utility sector on the Toronto Stock Exchange (TSX). Its stock gained about 30 per cent in the past six months.
The company’s revenue growth rebounded in 2021 despite a sharp slump last year following the COVID-19 pandemic. The utility company’s normalized earnings per share grew about 63 per cent year-on-year (YoY) in the first quarter of fiscal 2021, while its EBITDA rose about 35 per cent YoY.
AltaGas projected that its operational performance is likely to grow in the current financial year as the impact of the COVID-19 pandemic may be less pronounced. It also raised its normalized EBITDA forecast for 2021 from its earlier estimates, highlighting an expected improvement in its operational performance.
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H2O Innovation Inc (TSX:HEO)
A top performer among micro and small-cap utility companies on the TSX, H2O Innovation stock expanded about 35 per cent in the past six months. Its stock price rose to a 52-week high of C$ 3.7 in February this year, but has since declined to close at C$ 2.45 on Tuesday, May 18.
A long-term investment in the renewable stock is likely to generate healthy returns as the stock grew about 67 per cent in the last five years.
The company’s revenues in the third fiscal quarter ending 31 March 2021 rose about 8.6 per cent a year-over-year to hit C$ 39.2 million. Its net debt for the same quarter shrunk to C$ 3.3 million.
Its operational performance also improved in Q3 FY21, with the adjusted EBITDA rising about 19.5 per cent YoY.
H2O Innovation Inc focuses on the business of water reuse treatment. Seeing the rising demand for clean tech services, the utility company is expected to benefit from this business environment.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
