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Renewable Energy Leader
at a Dream Buy Price

Russia’s invasion of Ukraine and the unexpectedly severe global reaction to it have understandably triggered mass selling of any company with perceived exposure. Among the damaged is Aggressive Holding Enel SpA (Italy: ENEL, OTC: ENLAY), notes energy sector expert, Roger Conrad, editor of Conrad’s Utility Investor.

Like many renewable energy-focused stocks, Enel has been sinking since hitting an all-time high in January 2021, following three years of better than 30 percent annual returns.

Selling picked up steam as supply chain disruption and rising commodity costs raised doubt about wind and solar construction. And it’s accelerated on Russia fears, leaving the stock underwater by roughly -20 percent year to date.

Enel announces 2021 results and guidance on March 17. But preliminary numbers, results of subsidiaries and the company’s “Operating Data Report” reveal no slowdown of its global renewable energy expansion. Some 5.12 giga- watts of wind, solar and storage entered service last year alone, up 64.8 percent from 2020.

Total renewables capacity is now 54 GW, with 6 GW to be added in 2022. The 2030 goal of 154 GW is supported by record high project backlog of 370 GW. And the company is spending big on transmission and distribution as well, including EV charging networks in multiple countries.

An adverse shift in Chilean, Italian and/or Spanish regulation could crimp profits near-term. But there’s no indication the company’s not managing costs effectively. And Enel is still accessing capital markets on favorable terms, with “sustainability” bonds structured to reduce interest rates as renewable energy targets are met.

Enel will likely have to show a few more quarters of resilience to narrow its discount to less aggressive utilities. But concerns about Russian exposure may disappear any time, as there’s almost no direct country exposure and natural gas supply risks are mitigated by oversupply in Spain and Italy’s proximity to North Africa.

Trading at just 10.6 times expected next 12 months earnings and with a well-covered growing dividend of nearly 7 percent, this stock looks very cheap now. I never recommend really loading up on any one stock. But Enel SpA ADRs traded under the “ENLAY” symbol are a great buy below my Dream Price of 7.”

Editor’s Note: For more than 20 years, Conrad’s Utility Investor has delivered high-quality analysis and rational assessment of the best dividend-paying utilities, MLPs and dividend-paying Canadian energy names. For more information and a FREE sample issue visit www.ConradsUtilityInvestor.com.

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