Could the worst be over for the AGL (ASX:AGL) share price?

Are AGL shares a buy for 2022?

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This year has been dramatic for AGL Energy Limited (ASX: AGL) and its share price, but is the future looking brighter for the embattled energy provider?

James Gerrish, Shaw and Partners senior investment advisor and author of Market Matters, thinks the worst might be over for AGL shareholders.

As of yesterday's close, the AGL share price is $5.88. That's 51.49% lower than it was at the start of 2021.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 10.4% this year.

Let's take a look at what this expert tips for the future of the soon-to-be-demerged company.

Will 2022 be the AGL share price's year?

The AGL share price might not dip much lower than its current share price. In fact, it could be readying itself for future gains, according to Gerrish.

He recently told Livewire that he believes the energy provider's stock will have a roaring 2022 compared to its performance in 2021. Gerrish commented on the AGL share price's tumble:

A large portion of that drop is correct, but it now becomes an asset at play…

[At around its current share price] it's cheaper than its retail business. So that for me is a buy and will do better in '22 than it did in '21.

That retail business is expected to be split from the company's generation business if it undergoes its planned demerger.

AGL's power generation business will be handed to a new entity, Accel Energy. Meanwhile, its retail business will become AGL Australia.

The company's chair, Peter Botten, told its annual general meeting that AGL share price's "disappointing" recent performance was mainly due to low wholesale energy prices and growing demand for decarbonisation.

According to the Clean Energy Regulator, AGL was Australia's largest carbon emitter over the 2019-2020 year.  It put out 42.2 million tonnes of scope 1 carbon emissions in that time.

All eyes will be on the AGL share price next year, and not just because of Gerrish's prediction. Plenty will also be eager to learn if the company's demerger will come to fruition in the final quarter of financial year 2022.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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