Market watchers will be well aware of the struggles the AGL Energy Limited (ASX: AGL) share price has faced lately.
After starting the year trading for $12.12 apiece, AGL shares are currently trading for $7.52 per share.
The company has recently been battling to sell the market on its contentious demerger plan. However, confidence in the energy giant seems to be lost.
But does AGL’s ongoing struggle make it a good buy?
As Warren Buffet once said, “we simply attempt…to be greedy only when others are fearful”.
Let’s take a look if now could be a good time to follow Buffet’s advice and take on AGL shares.
Is AGL a good buy?
As many investors have no doubt said, ‘the most you can lose is 100%’, and AGL is certainly trying that out for size.
Its fallen 70% over the last 4 years. However, it does have a plan for turning its bad luck around.
AGL outlined its plan for its demerger late last month to the detriment of its share price.
AGL said the demerger will see it split into 2 companies. The first will be named Accel Energy and take over the company’s energy generation business, including its coal mines.
The other will go by AGL Australia. It will be a carbon neutral energy wholesaler.
AGL plans for those who hold AGL shares at the time of the demerger to end up with one share in each of the resulting listed companies. Accel Energy will retain between 15% and 20% of AGL Australia.
So, it is a good time to buy? As noted above, there’s only so much a company’s shares can drop.
Therefore, investors who have faith in AGL’s demerger plan, as well as a high-risk tolerance, might want to start thinking about getting the energy giant in their portfolio before the demerger goes ahead. Or, before AGL manages to inspire the general market’s confidence, as that would assumably boost its share price.
Additionally, the company is reportedly looking to purchase embattled solar company Autonomous Energy, which could provide a step towards AGL’s goal of decarbonising its business.
Of course, there’s always the risk that AGL won’t be able to turn its bad luck around. Additionally, all investments should be individual decisions that take into account an individual’s investment style, portfolio, and risk tolerance.
AGL share price snapshot
The AGL share price has fallen 37% since the start of this year.
It is also 55% lower than it was this time last year.
The company has a market capitalisation of around $4.6 billion, with approximately 623 million shares outstanding.
