All This Makes Me Even More Bullish On Centrica PLC

Peter Stephens is keen on Centrica PLC (LON: CNA) following no-nonsense comments from the group’s boss.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve always admired people who stand up for what they believe in and have the guts to say what they think in a straightforward and honest manner.

Indeed, I think such qualities make for a potentially great chief executive and they are character traits I look for when investing. I like a chief exec who will defend his or her company and back themselves when they feel they are in the right.

So, I was pleased to see that Centrica‘s (LSE: CNA) (NASDAQOTH: CPYYY.US) boss, Sam Laidlaw, was recently criticising the government’s flagship energy plan that aims to make houses more energy efficient. He said it makes houses far more costly than the government had expected.

Laidlaw also called for an overhaul of the initiative, which requires power suppliers to pay for energy-efficient house improvements, saying that it was more expensive than the scheme it replaced.

Furthermore, the current scheme is “complicated” and “expensive to administer”, according to Centrica’s leader.

Indeed, the cost of carbon abatement under the old scheme was around £25 per tonne, whereas now it is more like £110 per tonne. This should concern Centrica’s shareholders, because it is thought to be costing the company around £100 million per year.

Clearly, the new scheme does not appear to be great news for investors in Centrica. However, the robust response from the chief exec shows that shareholders’ interests are being looked after, which should provide investors with a degree of confidence.

Another welcome aspect of Centrica is its yield of 4.1%, which is particularly relevant given that interest rates look set to stay low for quite some time yet. In addition, the shares trade on a price to earnings (P/E) ratio of 14.5, which compares well to the FTSE 100 on 15.2 and also to Centrica’s industry group (utilities), whose P/E is 14.7.

Furthermore, Centrica’s earnings per share are forecast to grow by 5.5% per year over the next two years, proving that utilities can provide investors with growth opportunities as well as an impressive yield.

Indeed, this mix of yield and growth is something I seek-out in a potential investment. If you’re the same, I would recommend you take a look at this exclusive report, which details the best ideas The Motley Fool website currently has to offer.

The report is called “5 Shares You Can Retire On” and is completely free to view. Click here to take a look!

> Peter owns shares in Centrica. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

What on earth happened to the Premier African Minerals (LSE:PREM) share price?

The Premier African Minerals (LSE:PREM) share price is down a whopping 85% in the last year, so what happened? Gordon…

Read more »

Modern suburban family houses with car on driveway
Investing Articles

Here’s why Persimmon shares could just be getting started

With a new government now in place, many investors are getting excited about the housing sector again. So are Persimmon…

Read more »

Investing Articles

How to invest £1,000 in an ISA and aim for a second income of £171,523

Dividend stocks are a natural choice for investors seeking a second income. But this might involve missing out on some…

Read more »

Investing Articles

Down over 70% in 5 years, will the TUI share price ever recover?

The last few years have been bumpy for the travel sector. But with the TUI share price still down substantially,…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Spirax share price has gone nowhere in five years! Time to buy?

The Spirax share price stands almost exactly where it did five years ago. Our writer asks why? And, more importantly,…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

3 shares I’m avoiding like the plague in today’s stock market

Our writer picks a trio of shares from the London stock market he has no plans to buy right now,…

Read more »

Investing Articles

Up 167% in 2024! Is this growth stock showing any signs of slowing?

With artificial intelligence (AI) changing the world in the last few years, growth stock Nvidia has enjoyed an incredible run.…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Lloyds’ share price is dirt cheap! But I’d still avoid it like the plague

Lloyds' share price looks a brilliant bargain at 59p. But closer inspection suggests this could be a FTSE 100 share…

Read more »