At the most unexpected moment there has been a turnaround in the electricity companies. Going from buying to selling in a few weeks. Especially when some of its most representative values were in a free rise technical situation. That is to say, without resistance ahead, which predicted that their prices would reach much higher levels than the current ones. But by surprise, this idyllic setting has disappeared to the despair of small and medium investors who have taken positions in some of these stocks.
The reason for this change in perception is because Credit Suisse has lowered the Naturgy's recommendation, Iberdrola and Endesa following the proposal of the National Markets and Competition Commission (CNMC), which proposes an average cut of 17,8% for distribution and 21,8% for gas transportation. It is a tough resolution that goes against the strategic interests of companies in this important sector of Spanish equities. And that happened to be one of the most bullish until now.
In the specific case of Iberdrola, Credit Suisse has lowered the recommendation to neutral from above market since it considers that the upward potential of its titles is limited. The investment bank explains in its report that Naturgy's business portfolio "represents a challenge" within the current energy transition, in which future gas infrastructures, which represent 50% of the group's ebitda by 2020, They are under review and renewable energies are the main source of growth for the sector.
Falls in electricity prices
Since the proposal of the National Markets and Competition Commission (CNMC) came to light, the prices of the securities linked to this sector have only fallen on the stock market. In some cases, under an unusual intensity and little known in recent years and that has led to a large part of small and medium investors having had to adjust their investment portfolios. Faced with the real risk that their shares continue to decline in equity markets nationals. To the point that all the profits generated up to now can be eaten.
While on the other hand, it should also be noted that these securities on the Spanish stock market are being the subject of significant outflows by investment funds of special international importance. As one of the greatest effects that the recent proposal of the National Markets and Competition Commission has caused. To the point that these days the selling pressure is being imposed with some clarity on buying positions. At levels not seen in recent months where the price of its shares led a significant upward escalation.
It is recommended to undo positions
The recommendation of the main financial intermediaries is very clear at this time, to get out of the positions of the electricity companies that are listed on the stock market. After it had a mandate to keep or buy. But the resolution of the National Commission of Markets and Competition has upset everything. To the point that do not see potential for appreciation in these values. If not, on the contrary, they are trading at a discount that must be speeded up in the coming days. Being one of the sectors most punished by small and medium investors, as in investment funds that have already begun to distrust these proposals in the equity markets.
The only electrical value that is out of this general consensus is Iberdrola, and that in the opinion of financial intermediaries still has a small upward path. With a target price of around 8,80 euros per share from the current 8,50. Due to the greater diversification in its business lines and that is fundamentally due to its clear commitment to renewable energies. In this sense, the advice from financial brokers is a maintenance that can encourage some than other purchases towards the end of the year. Being the utilities that is most favored by analysts in the equity markets.
Strategies to take with electrics
In any case, the electricity sector will have to be abandoned by small and medium investors. At least for the moment and given what may happen with these values in the following months. In this sense, there are another series of stock sectors that seem to be more attractive to open positions by showing a higher appreciation potential. One of the most relevant is banking because it has depreciated with great intensity in recent months. And show prices in their quotation much tighter to make the savings more effective.
One of the best bets materializes in the Banco Santander, as long as the formation of its prices remains at levels above 4 euros per share. While on the other hand, other information suggests that the value of this financial institution is equivalent to that of the other banks. That is, it can develop better behavior than in the other cases. With a long-term look at 6 euros and that could be a good level to get out of their positions, although for this you have to wait a lot of months and it is not executed in this current year. In any case, it is a value that must be taken into account in any investment portfolio.
Enagás the worst of all
Of course, the most relevant data of all is that the gas company has been the one that has developed the worst behavior in the equity markets after the resolution of the National Markets and Competition Commission. By leaving more than 20% of your assessment by the wayside on the stock market and knowing that it may continue to fall in the coming months after a strong selling trend breaks through. To the point that its shares are already trading below the levels of 20 euros per share. Something unthinkable just a few months ago and that invites you not to open positions in one of the hottest stocks at the moment.
While on the other hand, it cannot be forgotten that there are already highly qualified voices that point to Enagás will not be able to keep current dividends as of 2021. When in reality the payment of its dividends was undoubtedly one of the main incentives to take positions in this company linked to gas consumption. Although it is also true that their prices at the moment are much more competitive than before and that they can tempt more than a small and medium investors to take positions in the value to make their savings profitable with greater guarantees of success.
In any case, it is a sector that no longer enjoys the preferences of the financial markets, as it did when the year began. If not, rather the opposite, and it is time to analyze whether it is really advisable to take risks in these operations. Or, on the contrary, go towards other sectors that show a more upward trend and with greater prospects of revaluation, at least in the short and medium term. It will be a decision that must be taken very calmly because a lot of money is at stake from now on. Even with a change in the trend in the equity markets that can complicate trading in the stock market in the last part of this complicated exercise.
Is it time to sell?
When it comes to quantifying the possible profits of each stock exchange transaction, not only do we have to look for the difference between the purchase price and the sale price, but we must also add the commission rates that each stock transaction has, as well as the of custody and, of course, the amount that is destined to the Treasury, by 18%. Adding all of them –which represent between 0,40% and 1,60% of the invested capital- it will be possible to detect the true profitability of the investment, which in the cases in which capital gains are minimal It may not even be able to amortize the effect of commissions and taxes. This is something that retail investors will have to value.
This should be an operation to be performed by all retailers before deciding to sell or wait for the benefits to be greater. On the contrary, when the capital gains generated are larger, the less will be the impact of these amounts. Likewise, the higher the amounts invested - despite the increase in commissions - the lower the impact on the final accounts for each operation carried out. For this reason, it is advisable to opt for one of the many offers offered by banks and savings banks to operate on the stock market, which in some cases can represent up to a 5% or 15% discount.