July 25, 2024
Top 10 Stock ALLETE Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: ALLETE – Top 10 Stock in Wind Energy
ALLETE is listed as a top 10 stock on July 25, 2024 in the market index Wind Energy because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 92 (top 92% performer), Obermatt assesses an overall strong buy recommendation for ALLETE on July 25, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Electric Utilities |
| Index | Low Emissions, Dividends USA, Diversity USA, Wind Energy, S&P MIDCAP |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View ALLETE Strong Buy
| 360 METRICS | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 64 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 92 |
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| SENTIMENT | ||||||||
| SENTIMENT | 70 |
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| 360° VIEW | ||||||||
| 360° VIEW | 92 |
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ANALYSIS: With an Obermatt 360° View of 92 (better than 92% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock ALLETE are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for ALLETE. The consolidated Value Rank has an attractive rank of 64, which means that the share price of ALLETE is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 64% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 92. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 70. But the consolidated Growth Rank has a low rank of 23, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 77 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 92, ALLETE is better positioned than 92% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 64), secure financing practices (Safety Rank of 92), and positive market sentiment in the professional investor community (Sentiment Rank of 70). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 23), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of ALLETE is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for ALLETE positive
ANALYSIS: With an Obermatt Sentiment Rank of 70 (better than 70% compared with alternatives), overall professional sentiment and engagement for the stock ALLETE is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for ALLETE. Analyst Opinions are at a rank of 27 (worse than 73% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in ALLETE. Even better, the Professional Investors rank is 60, meaning that professional investors hold more stock in this company than in 60% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 89, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 89% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 70 (more positive than 70% compared with investment alternatives), ALLETE has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: ALLETE Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 64 (better than 64% compared with alternatives), ALLETE shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for ALLETE. Expected dividend yields are higher than for 68% of comparable companies (a Dividend Yield rank of 68), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 87, which means that the stock price is lower compared with invested capital than for 87% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 45 which means that the stock price compared with what market professionals expect for future profits is higher than for 55% of comparable companies, indicating a low value concerning ALLETE's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for ALLETE with a rank of 47. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 53% of comparable companies, indicating a low value concerning ALLETE's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 64, is a buy recommendation based on ALLETE's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, ALLETE may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: ALLETE Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 23 (better than 23% compared with alternatives), ALLETE shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for ALLETE. Sales Growth has a below market rank of 44, which means that, currently, professionals expect the company to grow less than 56% of its competitors. The same is valid for Capital Growth, with a rank of 11, and Profit Growth, with a rank of 12. Currently, professionals expect the company to grow its profits less than 88% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 97, which means that the stock returns have recently been above 97% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 23, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for ALLETE, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: ALLETE Debt Financing Safety very solid
| SAFETY METRICS | July 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 96 |
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| REFINANCING | ||||||||
| REFINANCING | 94 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 32 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 92 |
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ANALYSIS: With an Obermatt Safety Rank of 92 (better than 92% compared with alternatives) for 2024, the company ALLETE has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of ALLETE is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators where two out of three are above average for ALLETE.Leverage is at 96, meaning the company has a below-average debt-to-equity ratio. It has less debt than 96% of its competitors.Refinancing is at a rank of 94, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 94% of its competitors. Liquidity is at 32, meaning that the company generates less profit to service its debt than 68% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 92 (better than 92% compared with alternatives), ALLETE has a financing structure that is significantly safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: ALLETE Top Financial Performance
| COMBINED PERFORMANCE | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 64 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 32 |
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| COMBINED | ||||||||
| COMBINED | 84 |
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ANALYSIS: With an Obermatt Combined Rank of 84 (better than 84% compared with investment alternatives), ALLETE (Electric Utilities, USA) shares have much better financial characteristics than comparable stocks. Shares of ALLETE are a good value (attractively priced) with a consolidated Value Rank of 64 (better than 64% of alternatives), are safely financed (Safety Rank of 92, which means low debt burdens), but show below-average growth (Growth Rank of 23). ...read more
RECOMMENDATION: A Combined Rank of 84, is a strong buy recommendation based on ALLETE's financial characteristics. As the company ALLETE's key financial metrics exhibit good value (Obermatt Value Rank of 64) but low growth (Obermatt Growth Rank of 23) while being safely financed (Obermatt Safety Rank of 92), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 64% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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