Should you stay invested in these 5 energy utility stocks?

Highlights

  • Over 20 UK energy suppliers have collapsed in the last 12 weeks since the energy crisis started in August.
  • Energy regulator Ofgem has pledged to introduce more stringent stress tests for energy suppliers to determine if they are capable of overcoming the unpredictable energy market shocks.
  • Analysts expect more energy suppliers to go bust, the number of suppliers in the market can go less than 10 by next year’s spring. 

With over 20 UK energy suppliers going bust in the last 12 weeks, more stringent stress tests are being pledged by Ofgem to determine that the energy suppliers have the necessary financial strength to overcome the market crisis due to soaring energy prices. The suppliers which would fail to survive the energy market shock would have to deal with the consequences accordingly. Even big names, like Bulb Energy, were in the list of collapsed suppliers, leading to a taxpayer bailout of billions of pounds to continue providing energy to millions of households ahead of an already rough winter.

The unprecedented increase in energy prices has created a lot of uncertainty in the market. Even though majority of big energy suppliers have been able to cope up with the unpredictable market shock due to buying energy in advance, they are still exposed to the crisis. The market analysts are anticipating that many more energy suppliers could potentially go bust in the upcoming months which could drastically reduce their number from over 70 to less than 10 by next year’s spring.

To overcome the ongoing energy market crisis in the UK, the energy regulator has proposed to establish new rules in February 2022 to enhance the resilience of the energy market. The alteration of the energy price cap would be permitted more swiftly under the new regulations to adjust rapidly to the abrupt changes in the energy market.

Here are 5 energy utility stocks listed on the London Stock Exchange, which may be impacted by the news.

RELATED READ: Why high wholesale energy prices can be fatal

 Energy stocks

Source: Copyright © 2021 Kalkine Media

National Grid plc (LON: NG)

National Grid plc is responsible for distribution of electricity and gas across the country. The current market cap of the FTSE100-listed company stands at £36,409.56 million. It has given a return of 17.26% to its shareholders in the last one year and its YTD return stands at 15.02% as of 1 December. National Grid plc’s shares were trading at GBX 994.90 at 11:16 AM on 1 December 2021 (GMT).

SSE PLC (LON: SSE)

Scotland-headquartered SSE PLC’s current market cap stands at £16,539.56 million. It has given a return of 16.78% to its shareholders in the last one year and its YTD return stands at 4.40% as of 1 December. SSE PLC’s shares were trading at GBX 1,565.50 at 11:21 AM on 1 December 2021 (GMT).

Centrica PLC (LON: CNA)

Berkshire-headquartered Centrica plc’s current market cap is £3,809.52 million. It has given a return of 50.17% to its shareholders in the last one year and its YTD return stands at 42.22% as of 1 December. Centrica plc’s shares were trading at GBX 66.26 at 11:26 AM on 1 December 2021 (GMT).

RELATED READ: How trouble at Yamal-Europe gas pipeline can worsen energy crisis

Drax Group Plc (LON: DRX)

UK-based renewable energy company Drax Group Plc’s current market cap stands at £2,195.65 million. It has given a return of 83.01% to its shareholders in the last one year and its YTD return stands at 60.27% as of 1 December. Drax Group plc’s shares were trading at GBX 601.00 at 11:30 AM on 1 December 2021 (GMT).

Contourglobal PLC (LON: GLO)

ContourGlobal plc is a UK-based company engaged in wholesale power generation. The current market cap of the FTSE250-listed company stands at £1,196.80 million. It has given a negative return of 5.37% to its shareholders in the last one year and its YTD return stands at -12.85% as of 1 December. ContourGlobal plc’s shares were trading at GBX 186.60 at 11:37 AM on 1 December 2021 (GMT).

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