Why Xcel Energy Could Be A Bargain Despite Wildfire Risks

Apr. 14, 2024 8:10 AM ETXcel Energy Inc. (XEL) StockXEL22 Comments

Summary

  • Utilities are facing challenges including rising capital expenditures, expensive energy transition, inflation, and higher borrowing costs.
  • Utilities are underperforming compared to low-risk government bonds, affecting their attractiveness as income-generating investments.
  • Xcel Energy, despite facing wildfire litigation risks, has a strong core business, consistent earnings growth, and potential for long-term success.
  • Looking for more investing ideas like this one? Get them exclusively at iREIT® on Alpha. Learn More »

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Introduction

Utilities are having a very tough time. In January, The Wall Street Journal wrote an article titled "Utilities Get An Inflation Shock."

They are facing the perfect storm, including rising capital expenditures related to storm and fire-related damage, the

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This article was written by

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Leo Nelissen is an analyst focusing on major economic developments related to supply chains, infrastructure, and commodities. He is a contributing author for iREIT®+HOYA Capital.

As a member of the iREIT®+HOYA Capital team, Leo aims to provide insightful analysis and actionable investment ideas, with a particular emphasis on dividend growth opportunities. Learn More.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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