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Here's Why You Should Add Pampa Energia to Your Portfolio

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Pampa Energia S.A. (PAM - Free Report) is benefiting from its focus on delivering a safe, clean and reliable energy source to customers. Also, the utility’s strong fundamentals remain a tailwind.

Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) stock a strong investment pick. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2020 and 2021 earnings has moved 45.4% and 7% north, respectively, in the past 60 days.

Stellar Surprise History & Long-Term Earnings Growth

Pampa Energia’s trailing four-quarter earnings surprise is 153.99%, on average.

Its long-term (three to five years) earnings growth rate is currently projected at 6.46%.

Capital Plans Bode Well

The company has direct and indirect interests in Transportadora de Gas del Sur S.A. (TGS), Argentina’s major gas transportation company. Pampa Energia’s five-year investment plan to be executed by TGS is already approved. The company requires significant investments in the operation and maintenance of its pipeline system to provide a quality-driven, safe and reliable service. The plan valued at $6,786 million, commenced on Apr 1, 2017 and will be on track through Mar 31, 2022.

Strong Financial Position

Pampa Energia’s long-term debt-to-capital is 39.86% compared with the industry’s average of 49.71%. Its times interest earned (TIE) ratio declined to 1.85 at the end of second-quarter 2020. However, a greater-than-one TIE ratio reflects the company’s ability to meet its debt obligations in the near future without any difficulty.

Stock Surpasses Industry

The stock has gained 4.7%, outperforming the industry’s rise of 4.4% in the quarter-to-date period.

Solid Cash Flow From Operation

The company has been generating consistent cash flow from operation since 2017. Net cash flow generated by operating activities surged 31.5% year over year to $802 million in 2019.

Other Stocks to Consider

A few other top-ranked utilities are Energias de Portugal (EDPFY - Free Report) , Portland General Electric Company (POR - Free Report) and Essential Utilities Inc. (WTRG - Free Report) , all carrying the same Zacks Rank as Pampa Energia at present.

Energias de Portugal has a long-term earnings growth rate of 5.66%. The Zacks Consensus Estimate for 2020 earnings has moved 10.8% north in the past 60 days.

Portland General Electric Company delivered an earnings surprise of 7.74%, on average, in the last four quarters. The company has a long-term earnings growth rate of 5.14%.

Essential Utilities has a long-term earnings growth rate of 6.01%. The company delivered an earnings surprise of 9.67%, on average, in the trailing four quarters.

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