Shares of utility holding company Exelon Corporation (NYSE:EXC) have been gaining momentum, reaching decade-long highs. The company owns power generation facilities that use nuclear, hydro, biomass, solar and wind to house its 10.5 million customers. Rising oil prices have pushed other energy suppliers up. The company considers itself a leader in ESG and aims to achieve a net zero footprint. Exelon recently completed a tax-free spin-off of Constellation Energy (NYSE:CEG), the nation’s largest producer of carbon-free energy with its 13 nuclear power plants. While Exelon’s record holders received 1 share of CEG for every 3 shares of EXC on January 20, 2022, both shares reflect each other’s price action. Cautious investors seeking exposure in a clean energy company game can look forward to opportunistic pullbacks in Exelon stocks.
Constellation Energy Spin-Off
On February 1, 2022, Exelon spun off Constellation Energy after taking it over ten years ago. Exelon shareholders received one share of CEG for every three shares EXC held. Constellation has a nuclear capacity of 21 gigawatts across 13 power plants, making it the largest generator of carbon-free energy in the US. % industrial average. Operating expenses have fallen since 2017, making operating expenses lower than in the industry. The Constellation spin-off will begin with a reduction in debt and a strong balance sheet that will allow for a $0.55 annual dividend to shareholders from the start. In addition, Constellation expects to grow its dividend by 10% annually. Free cash flow allows the company to generate more than $2 billion in operating activities, in addition to dividends, capital expenditures and debt reduction. Although Constellation is the second largest supplier of electricity to consumers, it has a 23% market share of commercial and industrial customers, making it the largest supplier for that segment. This is an important niche as they tend to be more stable than residential customers. With the pursuit of zero carbon among states, opinion of nuclear power as a stable and clean energy source continues to improve and Constellation should be a major benefactor of the momentum. Shares of CEG have catapulted to new all-time highs above $64 since the spin-off.
Exelon provided upward guidance for fiscal 2021 for earnings per share of $2.82 versus $2.68 by consensus analysts. The company reaffirmed its fiscal year 2022 earnings per share forecast of $2.18 to $2.32 versus $2.25 by consensus analysts.
On March 11, 2022, Mizuho analyst Paul Fremont raised the stock to a Buy rating of Neutral with a target of $46. He forecasts Exelon’s EPS to exceed a 7.3% growth rate and predicts an FFO-to-debt ratio of 13. .4% for 2024. The regulatory calendar for 2022 slightly anticipates a major general tariff case to be filed in 2023 for its Commonwealth Edison subsidiary. The $1 trillion infrastructure bill includes $5 billion to build commonly used corridors connecting the US to electric charging stations, which should be a tailwind for utilities. The National Electric Highway Coalition is composed of more than 50 utility companies with the goal of providing charging stations along major highways by the end of 2023. Incidentally, RBC has downgraded Exelon’s shares due to the dilution of Constellation Energy’s performance.
EXC Opportunistic Withdrawal Levels
Using the gun charts on weekly and daily time frames provides an accurate picture of the landscape for EXC stocks. The weekly gun chart’s upward trend has a rising 5-period moving average (MA) support near the Fibonacci (fib) level of $46.38. The 15-period weekly MA is rising at $43.14 with weekly upper Bollinger Bands (BBs) at $50.20. The weekly market structure low (MSL) buy was triggered on a breakout above $36.73. The uptrend of the daily gun chart has a 5-period rising MA of $48.95 peaking at the fib level of $50.39. The daily upper BBs sit at $52.02 and the 15-period daily MA is rising at the $46.79 fib level. Daily stochastics roll up again above the 90 band. The daily MSL was above $42.68. The 50 daily period is rising at the $44.02 fib level. Cautious investors should not chase submissions and instead watch for opportunistic pullbacks at the $46.79 fib, $45.55, $44.73, $42.85 fib, $41.83 fib, $40.11 fib , $38.90 fib, $37.69 fib and the $36.76 fib/weekly MSL trigger. Upward trajectories range from the $57.03 fib to the $68.87 fib level.
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