One of the most bullish stock sectors in recent weeks is being, to the great surprise of many investors, the electrical and energy. With two companies, as in the cases of Endesa and Iberdrola, which are benefiting from the buying flow in the intermediation markets of our country. When until a few days ago his tendency was completely the opposite. As a consequence of being penalized in the foreseeable budgets presented by the Spanish government. But the problems for its approval have given new expectations so that its prices may revalue in the coming days.
In any case, purchase recommendations are being imposed these days by a large part of financial intermediaries. Who have raised their target price above what these companies are trading at this precise moment. Beyond other considerations of a technical nature and maybe even from the fundamental point of view. In this sense, the presentation of business results for the third quarter of this year has had a lot to do with it.
The prospects for the short term are very good and above those generated by other highly relevant sectors in Spanish equities. Very different from what may happen in the medium and long term that will already depend on other different conditions such as considering the entry of positions in one of these two companies that are listed in the Spanish selective index, the Ibex 35. In addition, it must be considered that they may be one of the most benefited from the long-awaited rally of the Christmas holidays that is so awaited by small and medium investors.
Endesa is testing the 20 euros
One of the most relevant cases of this upward trend in one of the most relevant sectors of national equities is Endesa. Its business results have positively surprised the financial markets. During the first three quarters of the year, it has been one of the beneficiaries of a liberalized market in this very strategic sector of the Spanish economy. And that have helped their listing prices have skyrocketed these days. To approach such important levels as the one established in the 20 euros per share.
Endesa has generated in this analyzed period net profit of 1.193 million euros, which in practice represents an increase close to 10% with respect to the same period of the previous year. Although a driving force behind this bullish scenario is to be found in the recovery of the gas business margin, the company reported. This fact has caused the buying movements to be imposing these days on the selling trend that seemed established just a few days ago. Specifically in the months of September and the first days of October.
Its income amounts to 15.353 million euros
Another very revealing data on the business results of the electricity company Endesa is due to the fact that the income of the energy company in the period from January to September amounted to 15.353 millones de euros. That is, 4% more than in the first nine months of 2017 and that have been collected by small and medium investors. On the other hand, it cannot be forgotten that in the last days of December it will distribute a dividend among its shareholders with a profitability very close to 7%. A fact that has not gone unnoticed by investors, both national and from outside our borders.
On the other hand, another of the reasons that have been liked by the different economic agents is the fact that its new objective will allow the group to reach the objective of an annual net profit of 1.400 million euros. Something that has encouraged the entry of new money in the financial markets that can lead to their actions to even exceed the important levels of 20 euros per share. Not surprisingly, the target price given by some financial intermediaries is between 20 and 21 euros. With which Endesa shares would still have a significant upward journey ahead.
Notes from JP Morgan
From this broker he has given his point of view on Endesa, although it was before publishing his business results for the third quarter of the year. Noting in its extensive statement that "a strong performance of the company's fundamentals in the third quarter and the tailwinds (in the short term) of the fourth quarter of the year support our perspective that Endesa will exceed its Ebitda forecasts for 2018" . Although on the other hand, it points out that its target price is currently 20,50 euros compared to the 19,55 euros at which the session closed last Wednesday. With what your upside potential it would approach levels a little over 5%.
These results have been particularly influenced by the fact that with the update of its Strategic plan, be in the best of conditions to raise your goals thinking about the end of the year that is about to be completed. With very positive prospects for the entire financial year of 2018. Something that can be reflected in the price of its shares with a view to the end of the year and that can be used to take positions with the aim of making the savings profitable in a year very difficult for national equities. As in other international stock markets and that can have a very interesting epilogue for small and medium investors.
Iberdrola in a less volatile position
For its part, the other large company in the Spanish electricity sector is in a somewhat similar situation to the previous one, but with a series of details that you should take into account if you are going to take positions in the coming days. To begin with, I have not generated in these days the intense movements that Endesa has caused. Not surprisingly, it has moved in its price under much narrower margins that are included between 6 and 6,50 euros per share. Where its stability has been one of the most common denominators for its valuation in the financial markets.
In any case, it is still another of the companies that may develop an interesting upward trend in the coming months. With a target in its stock market valuation that is very close to 7 euros. Therefore, it still has upward travel if it does not succumb to some medium and long-term support of some relevance. Although it may in between develop some correction of some consideration. For 20 years, its valuation has gone from just over 2 euros to the 6,50 euros at which it is currently listed. In other words, a revaluation of more than 100%.
A stable value on the stock market
In any case, if the actions of this electric company are characterized in something, it is that they are very stable. There is not great volatility in the difference between their maximum and minimum prices in the same trading session and this helps a good part of the most defensive investors in the market to enter their positions. Because it also offers its shareholders a very attractive dividend distribution. With a return on savings around 5% and above some of the most relevant values of the benchmark index for Spanish equities. Being another of the attractions to take positions in this company for the next few years.
It is a security that is more intended for positions aimed at the medium and long term due to its special characteristics. Since in the short they do not find resources since it is more complex to make the movements profitable due to their lower volatility. In any case, it is not a speculative value with which they can be made intraday operations or in the same trading session. In this sense, you can have Iberdrola shares perfectly in your investment portfolio since they will not give you excessive headaches from now on.
In an uptrend
In any case, these are two companies that maintain a clear upward trend and that can be your proposals for next year. Especially if the expectations are met that they may be a somewhat more complex stock market course than the previous ones. With greater instability in the financial markets and that can affect the equity risk international is greater than on other occasions.
In this sense, these two electricity companies can give you a certain touch of stability to your investment portfolio. With great possibilities that they continue to revalue in the coming months. Although these increases would not be materialized with much intensity, as is typical of Spanish electricity companies. Beyond other technical considerations and maybe also from the point of view of its fundamentals. On the other hand, they have remained at a good level for several months. You can have Iberdrola shares perfectly in your investment portfolio since they will not give you excessive headaches from now on.