I’ve been keeping a very close eye on the National Grid (LSE: NG.) share price this year. And I’m becoming more tempted to open a position.
But before I do so, I want to take a closer look at how it could perform for the remainder of the year.
A topsy-turvy first half
The first six months of 2024 produced a number of challenges for National Grid. Its share price moved up and down as a result.
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January saw it fall 0.2%. However, after finding its feet, it climbed 7.3% between February and 22 May.
The latter date saw its share price nosedive after the release of its full-year results and a £7bn rights issue announcement. It fell by 20%. It has slowly recovered. But it’s still down 4.5% for the year.
However, I’m more focused on where the stock could go. Where could it end 2024?
The bull case
Well, there are a few factors that could push its share price upwards. The first of these is linked to its rights issue announcement. With the equity it raises, the firm plans to invest £60bn over the next five years.
The move “will deliver annual group asset growth of around 10%, and 6%-8% underlying EPS (earnings per share) CAGR (compound annual growth rate)”.
Its half-year results are expected in November. Any positive updates on its growth plans could provide the stock with some momentum.
It’s also expected that interest rate cuts will occur as early as next month. Should that be the case, this could offer investor sentiment a boost, which could help lift markets.
The bear case
One issue I see is the large pile of debt it has on its books. This currently sits at £43bn. That could hinder growth plans. At the same time, any announcement of a delay in rate cuts would be negative as higher rates make debt more difficult to pay off.
Time to buy?
Analysts have a 12-month target price of 1,104p, or 18.1% higher than its current price. Going on that, I reckon we could see it edge closer to 1,000p as we come to the end of the year. Trading on 15.7 times earnings, I think the stock’s fair value and its share price has growing room.
So does that mean now is a smart time to consider buying some shares? I’d say so. If I had the cash, I’d happily buy National Grid today.
This year has been more chaotic than I reckon most shareholders were expecting. National Grid’s often associated with stable returns. So for its share price to produce such large swings is out of character.
There’s the threat this volatility continues to impact its performance in the second half. But even if it does, I like the look of National Grid as a stock that can offer stability over the long run. I’m especially bullish on its five-year growth plan.
It’s far from the most exciting company out there. But good portfolios are diversified. So as much as I love owning cutting-edge growth stocks, I know it makes sense to keep hold of a few ‘boring’ businesses.
I want to add more defensive stocks to my holdings. National Grid looks like a great candidate for the remainder of this year and way beyond that.
