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Opinions Mike Capombassis
American Electric Power Company IncAEPBUYJun 07, 2016
$65.84
Stock price when the opinion was issued
$130.30
As of Jun 22, 2026. Market Open.
electrical utilities
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BUY
One of the US's biggest electricity producers. Their commercial load growth is up 7.5% in the last quarter, the third straight that's above 7%. Will benefit from a resurgence in domestic manufacturing including a $20 billion Intel plant in Ohio where AEP is based. Pays a 4.5% yield. Trades at only 14x 2024 PE.
electrical utilities
BUY
A utility that serves 5.6 million customers in 11 states. Has pulled back 5% so fat this year as Wall Street rotates out of this sector, but he expects this rotation will reverse soon. Yesterday they reported another strong quarter with top and bottom line beats in Q4, and will sell an unregulated renewable business.
electrical utilities
BUY
Utilities thrive when the Fed hikes rates. AEP is us up 14% this year while the S&P is down 12%. Two weeks ago, AEP reported another solid quarter. Management said they were cautiously optimistic in their outlook. However, utilities will be less attractive if the Fed beats inflation and there are no more big rate hikes. That said, AEP is a well-run company. In January, the CEO will pass the torch to the CFO.
electrical utilities
BUY
It owns America's largest power transmission network and power generation assets. They've been moving into clean energy and are ahead in the game by building wind farms in Oklahoma to be finished early next year. The latest quarter was solid. It pays a 3.8% dividend. It's pulled back from $8, its August highs.
electrical utilities
BUY
Utilities became the worst sector once vaccines were announced, then took another hit when bond yields started rising. As a dividend stock, AEP is competing with bonds. But since end-February, AEP is up 14% as investors search for safety and certainty in an unpredictable market. AEP owns American's largest power transmission network and their assets boast major growth. Yesterday, it reported a solid revenue beat with a slight earnings miss. Management maintained their forecast. Pays a 3.4% dividend.
electrical utilities
COMMENT
Utilities are getting hammered in the reopening rally now. AEP is one of his favourite utilities; it's a consistent operator and has shifted from coal to solar, wind and natural gas. This has sunk from $93 late-October to $76 today. Last week, they reported a mixed quarter which didn't help. Trades at 16x earnings and pays a 4% yield.
electrical utilities
He typically doesn’t own utilities because they tend to be dividend yield plays, not dividend growth. This is an excellent company serving about 5.5 million customers in 11 states. You get good consistent mid-single digit dividend growth and earnings growth. Half their power generation comes from coal, so they are going to have to spend money over the next 5-6 years to retrofit some of their plants. Dividend yield of 3.4%.