We recently compiled a list of the 10 Worst Performing Utility Stocks in 2024. In this article, we are going to take a look at where Algonquin Power & Utilities (NYSE:AQN) stands against the other utility stocks.
Man of the hour, CEO Jensen Huang at the Bipartisan Policy Center on September 27, emphasized the crucial role of artificial intelligence (AI) in transforming the energy and utilities sector. According to Huang, AI has the potential to revolutionize the way energy is produced, distributed, and consumed, leading to significant economic and environmental benefits.
Huang highlighted the importance of accelerating the development and deployment of AI in the energy sector, citing examples such as smart grids, energy storage, and renewable energy integration. He noted that AI can help optimize energy distribution, predict energy demand, and identify areas of inefficiency in the grid. For instance, a study by the National Renewable Energy Laboratory (NREL) found that AI can help reduce energy waste by up to 15% by optimizing energy consumption in buildings and homes.
Huang also emphasized the need for a more efficient and resilient energy system, citing the growing demand for electricity and the increasing complexity of the grid. He argued that AI can help address these challenges by providing real-time monitoring and control, predictive maintenance, and advanced analytics. For example, a study by the Electric Power Research Institute (EPRI) found that AI can help reduce the frequency and duration of power outages by up to 50%.
Huang also highlighted the potential for AI to enable new business models and revenue streams in the energy sector, such as peer-to-peer energy trading and community-based energy sharing. For example, a study by the University of California, Berkeley found that peer-to-peer energy trading can help reduce energy costs by up to 20% and increase the adoption of renewable energy by up to 30%.
In terms of energy consumption, Huang noted that AI can help optimize energy usage in buildings, homes, and industries, leading to significant reductions in energy waste and greenhouse gas emissions. According to the U.S. Energy Information Administration (EIA), buildings account for approximately 40% of energy consumption in the United States, and industries account for approximately 30%. AI can help optimize energy consumption in these sectors by identifying areas of inefficiency and providing real-time feedback on energy usage.
In terms of policy, Huang argued that regulatory frameworks should support the development and deployment of AI in the energy sector. He called for increased investment in research and development, as well as workforce training and education programs to ensure that the energy sector has the necessary skills to adopt and deploy AI technologies.
Additionally, Huang emphasized the need for open standards and interoperability protocols to facilitate the integration of AI technologies in the energy sector. He noted that the development of open standards and interoperability protocols can help ensure that AI technologies are compatible with existing energy infrastructure, and can help facilitate the sharing of data and best practices across the industry.
AI has significant potential to transform the energy and utilities sector, leading to increased efficiency, reduced waste, and a more sustainable future. As the energy sector continues to evolve and grow, it is clear that AI will play a critical role in shaping its future, with that in context, let’s take a look at the 10 worst performing utility stocks in 2024.
Our Methodology
To compile our list of the 10 worst performing utility stocks in 2024, we used the Finviz and Yahoo stock screeners to find stocks that have experienced the most significant decline on a year-to-date basis and have a market cap of more than $500 million as of October 15. We then narrowed our choices to 10 stocks with the worst year-to-date performance. We also included their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in descending order of their year-to-date performance as of October 15.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 smallcap and largecap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An engineer in a control room monitoring a massive system, demonstrating the capabilities of rate-regulated utilities.
Algonquin Power & Utilities (NYSE:AQN)
YTD Performance as of October 15: -19.94%
Market Cap as of October 15: $4.00 Billion
Number of Hedge Fund Investors: 35
Algonquin Power & Utilities (NYSE:AQN) is a utility company serving over 1.2 million customers across the United States, Canada, and Chile. The company operates a portfolio of high-quality assets, including 13,517 miles of electric transmission lines, 8,482 miles of gas pipelines, and 6,941 miles of water mains.
On August 9, Algonquin Power & Utilities (NYSE:AQN) announced a definitive agreement to sell its renewable energy business, excluding hydro assets, to a wholly-owned subsidiary of LS Power for a total consideration of up to $2.5 billion. This sale is part of the company’s strategy to become a pure-play regulated utility and optimize its regulated business operations, aiming to create long-term value for both customers and shareholders.
Analysts view Algonquin Power & Utilities’ (NYSE:AQN) move as being on the right path, transforming into a traditional utility company with a stronger focus on regulated assets and cost reduction initiatives. The company’s new CEO is dedicated to cutting costs and improving profitability, with an emphasis on “capital-light growth” by enhancing regulatory coverage and conducting rate reviews. Industry analysts have reached a consensus Buy rating on the stock, with an average target price of $6, implying a potential upside of 16.80% from current levels.
Overall AQN ranks 7th on our list of the worst performing utility stocks in 2024. While we acknowledge the potential of AQN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AQN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.