Amid the Iran conflict raging in the Middle East, the energy sector and markets at large have been hit hard. This got me thinking. Prices are lower right now, but the volatility makes me hesitant to invest. This means I’d rather be looking at companies right now that are both removed from the spotlight on traditional oil volatility and exhibit strong industry positioning, preferably in an industry that we absolutely need (consumer defensive, etc.). Funny enough, I did some digging and ended up back in the energy sector. But, we’re not talking about a traditional commodity stock.
Constellation Energy Corp. (Nasdaq: CEG) is the largest nuclear, renewables, and clean energy supplying company in terms of total capacity following its acquisition of Calpine. This company has acquired 27 GW of geothermal and natural gas assets in California and Texas, diversifying its geographic risk. Revenue is expected to jump ~40% this year from this acquisition as well. All while being relatively safe from crude. The company’s dominant nuclear position, along with its renewables, natural gas, and other portfolios, means crude price fluctuations don’t heavily impact the business.
Beyond that, the stock has dipped to a cheap price point in my eyes. It was down ~11% at close last week after news officially hit the markets that they’d have to sell $5 billion in PJM assets due to antitrust concerns stemming from the Calpine acquisition. This is evidence of a company problem, though. More of the markets just “trading the news”. This presents even greater upside potential, with my model forecasting ~45% upside at fair value.
Read the full report on my research page! Let me know what you think in the comments!
Disclaimer:
This blog post is for educational and informational purposes only. It is not financial advice. I am not a licensed financial advisor, and nothing in this post should be interpreted as a recommendation to buy or sell any securities. Trading involves risk, and results are not guaranteed. Past performance is not indicative of future results. Always do your own research and consult with a licensed financial professional before making any investment decisions.
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