Centrica (CNA) & Yu Group (YU): 2 gas utility stocks to buy

Highlights

  • High gas prices may continue for the next 18 months to about two years, said Centrica CEO Chris O’Shea in an interview.
  • He said the rise in prices was due to high demand for gas, which is considered a transition fuel, as the world’s transitions to net-zero.
  • Many energy providers had gone bust in 2021 due to record gas prices

High gas prices may continue for the next 18 months to about two years, according to a BBC interview with energy provider Centrica’s CEO Chris O’Shea.

O’Shea added that the global move towards a low carbon economy has led to this high demand for gas, which is considered a transition fuel.

He added that getting gas supply from the North Sea would not be a domestic solution for the ongoing energy crisis, as gas prices may not have gone down back to their 2020 price of 50 pence per therm. Gas prices were at about £3 a therm in December 2021.

Energy prices surged in 2021 owing to a recovery in demand from the previous year. Several independent and smaller energy providers collapsed as they were unable to absorb the high gas prices.

Let us talk about the 2 FTSE listed gas utility stocks, and explore their investment opportunities:

  1. Centrica PLC (LON: CNA)

Centrica is a multinational energy provider of electricity and gas in the UK. It is the owner of British Gas and is a part of the FTSE 250 index.

British gas had taken on the customers of several collapsed energy providers in 2021, including Social Energy (5,500 domestic customers), Neon Reef (30,000 domestic electricity customers), Zebra Power Ltd (which had 14,800 domestic customers), and Bluegreen Energy Services Ltd (5,900 domestic and some business customers)

This was part of energy body Ofgem’s SOLR process, in order to provide customers of energy providers who had ceased trading, to continue getting access to uninterrupted energy supply.

The group is set to hold its general meeting in 2022 later this week on Thursday.

 CNA share price and volume

Image source: Refinitiv

The group’s shares dropped sharply by 1.29 per cent to GBX 73.54 on 12 January 2022 at 11:01 AM BST. Meanwhile, the FTSE 250 index was at 23,133.44, higher by 0.46 per cent.

The group’s market cap was at £4,378.14 million, and it had a one-year return of 46.76 per cent as of date.

  1. Yu Group PLC (LON: YU)

Yu Group is a specialist energy supplier to UK businesses, providing commercial gas, electricity, and water solutions.

The group took on the customers of Ampoweruk Ltd starting from 7 November 2021 under Ofgem’s SOLR process. Ampoweruk had about 8,158 customers.

YU share price and volume

Image source: Refinitiv

The group’s shares were trading flat at GBX 255.00 on 12 January 2022 at 11:26 AM BST. Meanwhile, the FTSE AIM All-Share index was at 1,176.31, up by 0.23 per cent.

The group’s market cap was at £41.61 million, and it had a one-year return of 142.96 per cent as of date.

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