These two utility stocks have recently reported very different results: over the last month, APA has advanced +5.2% while AGL has retreated 16.1%. We have heard some investors considering a switch between the two on reversion grounds, but that is not a good enough reason on its own.
APA Group (APA) is trading near its 2-year high while yielding over 6.5% over the next 12 months. Last week, they delivered a solid FY25 result, with earnings at the top end of guidance and marginally above consensus. There are no alarm bells there, and we like this stock as a yield-sensitive defensive utility while interest rates are expected to decline.
AG Energy (AGL) disappointed earlier in the month when its FY25 annual profit and FY26 guidance fell short of expectations, prompting a steep dividend cut. The stock is testing its 2024 low with no bounce yet in sight. AGL is hoping to revive its fortunes with renewables, but there’s plenty of water to go under the bridge until we see if they get this right. The result was underwhelming, and especially its FY26 forecast coming in about 11% below expectations, prompting us to reassess our position in the MM Active Income Portfolio.
We are reevaluating our AGL holding but are more comfortable with APA: MM owns APA in its Active Growth and Income Portfolios, and AGL in its Active Income Portfolio.
MM prefers APA over AGL
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