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What Does Four More Years Mean for Big Energy and Utilities?

Policy decisions will have an impact on two industries worth watching


Since President Obama won the popular vote on November 6, the utilities sector has declined over 2.9% and energy has dropped 4.6%. And that’s because with another four years under President Obama, these sectors are going to have to make some historic changes.

Under the Obama Administration, the Environmental Protection Agency (EPA) has pushed for lower carbon pollution standards for new power plants. And utilities have responded by phasing out their coal powered plants in favor of natural gas and biomass powered plants. With further regulations to curb mercury and other toxic air pollution, power plants are going to need to be vigilant to keep their emissions up to code.

The EPA estimates that the mercury and air toxins addition will cost utilities companies nearly $11 billion a year—this is on top of the $21 billion cost associated with ongoing clean air regulations.

But that’s not to say that all energy and utilities companies will be hurt by these new regulations. In fact, those that are first to embrace biofuels and other sources of renewable energy oftentimes find themselves on the receiving end of government support. This administration has made the largest investment in clean energy in U.S. history, helping to double renewable energy production in the past four years. The big winners over the past few years have been wind, solar and geothermal energy.

That being said, if you’ve placed a big bet on energy and utilities, you may want to start rethinking your strategy. As a starting point, here are the 19 alternative energy and utilities companies that are buys right now in my Portfolio Grader stock rating system.

(Now, I’ve also included players from outside the U.S., and that’s because Obama Administration has also lowered trade barriers and tariffs to “environmental goods and services” from abroad. This move will undoubtedly fatten the profits of some international players as well.)

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
ADGE American DG Energy A C B
ARTNA Artesian Resources Corp. B C B
AWK American Water Works A C B
AWR American States Water A B B
BKH Black Hills B C B
CHC China Hydroelectric Corp. A C B
CHG CH Energy Group (Holding Co.) A C B
CMS CMS Energy A C B
CPN Calpine Corp. B C B
DTE DTE Energy A C B
HNP Huaneng Power International A B A
NGG National Grid PLC A C B
NI NiSource B C B
SBS Companhia de Saneamento Basico do Estado de Sao Paulo ADS A B A
SRE Sempra Energy A C B
WEC Wisconsin Energy A B B
WTR Aqua America A C B

But just because a company is green doesn’t mean that it has a green light to buy. I would recommend that you stay away from the following 21 companies:


Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
AEE Ameren F C D
AT Atlantic Power D C D
AVA Avista D D D
CNP CenterPoint Energy D D D
CWT California Water Service Group D B D
D Dominion Resources D D D
DYN Dynegy F C F
ED Consolidated Edison D C D
EOC Empresa Nacional de Electricidad S.A. ADS D C D
GNE Genie Energy D C D
MDU MDU Resources Group D D D
NRG NRG Energy D D D
ORA Ormat Technologies D D D
PEG Public Service Enterprise Group D C D
SYMX Synthesis Energy Systems D C D
TAC TransAlta Corp. F D F
TE TECO Energy F C D
TRIT Tri-Tech Holding F C D
VE Veolia Environnement S.A. ADR F C D

Tomorrow’s the day that we receive the latest estimate for third-quarter GDP, and you can bet that I’ll be covering that, so please stay tuned!

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