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Reasons to Add OGE Energy (OGE) to Your Portfolio Right Now

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OGE Energy’s (OGE - Free Report) regular investments to add clean power generation assets to its generation portfolio, strong economic growth and load growth as well as customer additions make it a solid choice for investment in the utility space.

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

Growth Projections

The Zacks Consensus Estimate for 2021 earnings per share has moved up 0.9% in the past 60 days.
 
The Zacks Consensus Estimate for earnings for 2021 and 2022 indicates year-over-year growth of 5.8% and 0.2%, respectively.

Return on Equity & Dividend Yield

Return on Equity (ROE) indicates how efficiently OGE Energy is utilizing shareholders’ funds to generate returns. At present, OGE Energy’s ROE is 14.55%, higher than the industry average of 9.26%.

Currently, OGE Energy has a dividend yield of 4.75% compared with the industry’s 3.39%.

Surprise History and Earnings Growth

OGE Energy delivered an average earnings surprise of 24.1% in the last four quarters.

OGE Energy’s long-term (three to five years) earnings growth is projected at 4.5%.

Customer & Load Growth

OGE Energy’s is gaining from strong economic conditions in its service territories. OGE is expected to register 2.2% year-over-year load growth in 2021 and strong customer growth. OGE Energy reported a 1.3% increase in customers in third-quarter 2021 from 2020 levels. Strong load trends are expected to continue in 2022, driven by an increase in residential and commercial customers of OGE. 

Regular Investments & Emission Reduction

OGE Energy plans to spend around $4.2 billion between 2021 and 2025. Out of the planned investment, 75% will be directed toward low-risk transmission and distribution operations. For 2021, the company has allocated $750 million, which includes $670 million for distribution, solar panel subscription, generation and grid advancement activities, and $80 million for transmission projects.

OGE Energy has plans to lower carbon dioxide emissions to 50% from 2005 levels by 2030. To achieve this target, the company has converted two coal-fired generating units at the Muskogee Station to natural gas, among other measures. OGE is also deploying more renewable energy sources to lower emissions.

Price Performance

Over the past 12 months, OGE Energy’s shares have returned 12.1% compared with the industry’s 5.5% growth.

Zacks Investment ResearchImage Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked stocks in the same sector include Otter Tail Corporation (OTTR - Free Report) , California Water Service Group (CWT - Free Report) and Chesapeake Utilities (CPK - Free Report) , each holding a Zacks Rank #2.

Otter Tail, California Water Service, and Chesapeake Utilities delivered an average earnings surprise of 27.9%, 10.8%, and 12.6%, respectively, in the last four quarters.

The Zacks Consensus Estimate for 2021 earnings per share of Otter Tail, California Water Service, and Chesapeake Utilities has moved up 0.8%, 7.6%, and 3.5%, respectively, in the past 60 days.

Year to date, shares of Otter Tail, California Water Service, and Chesapeake Utilities have returned 60.9%, 18.2%, and 22%, respectively, compared with the Zacks Utility Sector’s 5% growth.