ELCPF - Energias de Portugal: An Attractive Utility With Almost 5% Yield

2024-02-13 04:23:41 ET

Summary

• Energias de Portugal is an undervalued company that is a good investment in a rising market.
• EDP has a technically appealing institutional shareholding, with BlackRock, Qatar, and China Three Gorges Corporation owning roughly 45% of the company.
• EDP has made significant M&A moves, including the acquisition of Viesgo, which has increased its presence in Spain.

Dear subscribers,

In this article, I'll show you another undervalued company that, I believe, will make for a good investment in this and even a rising market - I'm talking about Energias de Portugal ( EDPFY ), or EDP. The company was founded over 40 years ago as Electricidade de Portugal by the Portuguese government. What the government did was to merge 14 former national energy companies. The company then went through another very comprehensive restructuring in the mid-90s, which also included progressive privatization of the business, which is what has been happening over the past few decades.

EDP has a technically appealing institutional shareholding - with 45%, roughly, of the company, owned by a mix of BlackRock ( BLK ), Qatar, and the China Three Gorges Corporation. The latter tried to make a hostile takeover of the business in 2018 but ultimately failed to do so, rejected in 2019 at the AGM. I don't see, in today's geopolitical climate, that there will be a repeat of this attempt, and I consider EDP's ownership to be not a point against it....

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