Key points
- AGL was one of the worst performing ASX 200 shares of 2021
- But 2022 has given this company a fresh start
- That’s despite the ASX 200 going into correction territory…
As investors of AGL Energy Limited (ASX: AGL) would know, 2021 was not a great year for the ASX stalwart. In fact, with its 48.6% share price decline over the year that was, AGL was one of the 5 worst-performing shares on the S&P/ASX 200 Index (ASX: XJO) last year.
But in a surprise turnaround, this embattled energy generator and retailer has had what could be described as an unbelievably positive start to 2022. As my Fool colleague Bernd covered earlier today, AGL shares are one of the best ASX 200 performers over 2022 thus far. AGL shares are up a very pleasing 11.4% year to date. That includes the 0.3% the shares have added so far today at the time of writing, up to $7.02 a share.
And of course, that has occurred at the same time the ASX 200 has fallen off the proverbial cliff over 2022 so far, entering ‘correction territory’ just this week.
So AGL has quickly gone from a 2021 zero to a 2022 hero (so far, anyway). So what’s behind this ‘comeback kid’ tale?
AGL shares go from (not quite) zero to hero
Well, it’s not entirely clear why investors have changed their minds over AGL shares. It’s possible that the bevvy of positive broker recommendations we have seen have assisted. As my colleague covered, AGL has been the beneficiary of some love from not one, but two ASX brokers over January. Credit Suisse and JP Morgan have both given AGL shares a buy rating this month. Credit Suisse sees AGL at $8.560 a share in the next 12 months, while JP Morgan is estimating the company will reach $7.55.
The brokers point to AGL’s inherent defensiveness, as well as recovering global energy markets, as the reasons why they see the company heading higher from here.
Another factor that might be at play is AGL’s valuation is having a blue-chip share like AGL descend more than 70% over the past 5 years is a meaningful move. It’s possible that when the company hit a multi-decade low of $5.10 a share late last year, value investors decided that it was too cheap to ignore. Since those lows, the AGL share price is now up more than 36%.
Whatever the reason, we can’t escape the fact that AGL shareholders have now enjoyed the best couple of months for this share that we have seen in years. No doubt investors will be hoping the train keeps rolling, but we shall have to wait and see.
At the current AGL share price, this company has a market capitalisation of $4.63 billion, with a trailing dividend yield of 9.25%.
