XEL - Why Xcel Energy Could Be A Bargain Despite Wildfire Risks

2024-04-14 08:10:45 ET

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.

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 super expensive energy transition, and inflation, which makes operations even more expensive....

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