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4 Utility Stocks in Focus on World Environment Day 2021

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The theme for this year’s World Environment Day is Ecosystem Restoration. This year’s event will be held in Pakistan on Jun 5. The basic objective of celebrating this day is to focus on environmental issues and try to find a solution. Last year’s theme was Time for Nature.

Rapid industrialization, afforestation and rising air pollution are destroying the natural ecosystem that existed for centuries. This can be repaired by growing trees, cleaning up river and coasts, greening of cities as well as cutting down on greenhouse gas emissions.

Pakistan plans to expand and restore the country’s forests through a ‘10 Billion Tree Tsunami’ spread over five years. The United Nation (UN) is set to utilize the 2021-2030 time period involving over 70 countries across the globe to restore the damage already done to the ecosystem.

Increase in air pollution due to emissions from factories continues to affect the plants, thereby resulting in reduced growth and lower yield from harvest.

In 2020, the novel coronavirus outbreak wreaked havoc across the globe. One of the positive impacts of the same is the drastic reduction in pollution. Lockdown and extended stay-at-home orders as well as a decline in commercial and industrial (C&I) activities lowered the demand for electricity and improved the quality of air. However, as the process of reopening of activities has started, air pollution levels will again increase. An increase in C&I activities will lead to growth in the demand for electricity. Electricity generation, being a major contributor to pollution, will again deteriorate air quality.

Per the U.S. Energy Information Administration’s finding, the U.S. energy-related carbon dioxide emissions decreased 11% in 2020 as a result of less energy consumption related to reduced economic activity and responses to COVID-19. EIA now predicts energy-related emissions to increase 6% from the 2020 level, with growth in economic activity and energy use. Emission is expected to rise in 2022, albeit at a slower rate of 2%, from 2021 levels.

The companies belonging to the Zacks Utility Electric Power industry can play a major role in improving air quality, providing a permanent solution to lower air pollution over the long run and actively supporting UN’s goal of restoring the ecosystem.

A few utilities in the United States have already started working to reach their goal of becoming net-zero emission companies over the next few decades. Despite an expected increase in electricity load over the next few decades, let us focus on four utilities that have taken the decision to offer electricity to consumers even when commercial, industrial and other economic activities run at full pace.

Price Performance (Six Months)

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Avista Corporation (AVA - Free Report) , a Zacks Rank #2 (Buy) stock, has been providing clean and reliable energy to customers. The company has taken initiatives to supply 100% clean electricity to customers by 2045. The Zacks Consensus Estimate for 2021 of $2.12 has moved up 1.4% in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Xcel Energy (XEL - Free Report) , a Zacks Rank #3 (Hold) stock, is focusing on electricity generation from clean sources. It is working to reduce 80% carbon emissions by 2030 and generate 100% carbon-free electricity within 2050 from 2005 levels. The Zacks Consensus Estimate for 2021 earnings of $2.98 has moved up 0.4% in the past 60 days.

NextEra Energy (NEE - Free Report) , another Zacks Rank #3 stock, has started adding more clean electricity generation sources to the production portfolio through systematic capital investment. The company announced comprehensive plans to lower overall carbon footprint, which includes attaining at least 67% carbon emission reduction by 2025 from 2005 levels. The Zacks Consensus Estimate for 2021 earnings of $2.51 has been unchanged in the past 60 days.   

DTE Energy (DTE - Free Report) , another Zacks Rank #3 stock, is investing steadily to enhance renewable generation assets. The company aims to cut emissions by 50% by 2030 and 100% within 2050 from 2005 levels. The Zacks Consensus Estimate for 2021 earnings of $7.18 has moved up 0.7% in the past 60 days.

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