NG., DRX, CNA: Should you go for these energy utility stocks?

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NG., DRX, CNA: Should you go for these energy utility stocks?

 NG., DRX, CNA: Should you go for these energy utility stocks?
Image source: © Andreypopov | Megapixl.com

Highlights

  • NAO has said that the UK household will have to bear an additional cost of around £2.7 billion to cover the cost of 28 energy suppliers that went bust.
  • According to Cornwall Insight, the energy bills are on track to hit £3,000 by January 2023.

According to a report by the National Audit Office (NAO), the UK household will have to bear an additional cost of around £2.7 billion to cover the cost of 28 energy suppliers, which collapsed last year due to the sharp increase in the energy prices.

This would mean that an average of £94 will be an added cost for each household. The report partly blamed UK’s energy regulator, Ofgem, for creating a market susceptible to large-scale shocks by allowing small suppliers to enter the market with weak finances in an attempt to boost competition.

Between February and December last year, more than two dozen energy suppliers had gone bust due to a sharp spike in wholesale gas and electricity costs. However, suppliers could not pass rising costs to customers because of the energy price cap.

National Audit Office (NAO), the UK household energy bills are expected to rise by a combined £2.7 billion.

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In April, the energy regulator increased the energy price cap by 54% to a record £1,971. But according to Cornwall Insight, the energy consultancy firm, the energy bills could rise to £2,980 in October, and by January 2023, it could hit £3,000 with peak energy demands. 

Amidst this development, let’s look at the three FTSE-listed energy utility stocks.

National Grid Plc (LON: NG.)

National Grid Plc is an FTSE 100 listed and one of the world’s largest utility companies, focusing on the transmission and distribution of electricity and gas. With a market cap of £37,506.65 million, the share of the electricity and gas utility company was trading at GBX 1,032.00, up by 0.34% at 11:57 AM (GMT+1), as of 22 June 2022. The company has given its shareholders a return of 11.45% over the last year as of 22 June 2022, while its year-to-date return stands at -2.53%. 

Related Read: HAS, PAGE, STEM: Amid stagnant wage growth, are staffing stocks good bets? 

Drax Group Plc (LON: DRX)

The market cap of the renewable energy generation company stands at £2,556.32 million as of 22 June. Drax Group plc’s shares were trading at GBX 660.50, up by 3.53%, at 12: 01 PM (GMT+1), on 22 June. The FTSE 250 listed power generation company has provided its shareholders with a return of 53.97% over the last year as of 22 June, while its year-to-date return stands at 9.34%.

Related Read: MKS, SBRY, OCDO: Stocks to watch amidst soaring grocery bills

Centrica Plc (LON: CNA)

Centrica Plc is an FTSE 100 listed international energy services and solutions company with a market cap of £4,718.94 million as of 22 June. The company’s shares were trading at GBX 82.12, up by 2.80% at 12:06 PM (GMT+1), as of 22 June. The company has given its shareholders a return of 60.09% over the last year as of 22 June, while its year-to-date return stands at 14.99%.  

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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