Ameren (AEE) Hits 52-Week High On Strong Investment Plans

Shares of Ameren Corporation (NYSE:AEE) touched a new 52-week high of $52.31 on Jun 24. The stock eventually closed a little lower at $51.79, having gained roughly 21.9% so far this year and outperforming the 0.3% loss of the S&P 500 over the same period.

Ameren has a market cap of $12.57 billion. Over the past 52 weeks, the company’s shares have ranged from a low of $37.52 to a high of $52.31. Average volume of shares traded over the last three months is approximately 1.9 million.

What’s Driving the Stock?

Ameren invests systematically in growth projects and infrastructure upgrades. Over the 2016–2020 time frame, the company expects to spend $11.5 billion, comprising up to $4.3 billion for Ameren Missouri, up to $6.2 billion for Ameren Illinois and up to $1.0 billion for Ameren Transmission Company of Illinois.

Such investments are aimed to support overall system reliability, environmental compliance, and electric and natural gas utility infrastructure improvements. Under the Modernization Action Plan, the company will install around 780,000 electric and 470,000 gas meters at its service territories by 2019, which includes around 148,000 electric and 103,000 gas meters in 2016. In the first quarter, it invested around $145 million in Illinois Electric and natural gas delivery infrastructure projects. These initiatives will enable the company to continue providing reliable services to its customers, besides meeting increasing demand.

Ameren is currently focused on its rate regulated utilities. The company expects 6.5% compound annual rate base growth from 2015 through 2020. Focus on its regulated utilities will help to meet the projected compound annualized earnings growth rate of 5–8% in the 2016–2020 period.

Furthermore, Ameren boasts a solid financial position backed by a strong cash generation capacity. The company also demonstrates efficiency in terms of reporting stable cash inflow through operating activities. The company’s cash flow from operating activities in the first quarter increased 11.9% from the year-ago period. A stable financial position enables Ameren to maximize shareholder value through the payment of regular dividends and repurchase of shares.

Ameren currently has a Zacks Rank #4 (Sell).

Stocks to Consider

A few better-ranked stocks in the utility space include Spark Energy, Inc. (NASDAQ:SPKE) , NiSource Inc. (NYSE:NI) and CenterPoint Energy, Inc. (NYSE:CNP) . While Spark Energy sports a Zacks Rank #1 (Strong Buy), both NiSource and CenterPoint Energy carry a Zacks Rank #2 (Buy).