Companhia Paranaense de Energia - COPELNYSE: ELP

I recommend buying COPEL due to its attractive valuation, cost control, and reduced leverage, despite mixed 2Q24 results with stable revenues and margins. Revenues grew 2.2% annually to BRL 5.4 billion, driven by strong distribution offsetting weak generation, with a strategy to mitigate future energy price risks. Net income surged 53.9% YoY to BRL 474 million, boosted by a non-recurring item, demonstrating strong profit growth despite lower-than-expected net income.

COPEL's transition to privatization has resulted in significant growth, with shares increasing by over 50% in the past year. Despite initial reservations, the company's improved operational efficiency and positive cash flow post-privatization justify upgrading the recommendation from neutral to buy. In Q4 2023, ELP reported impressive results, including a 10% increase in EBITDA and doubled annual profit, showcasing its resilience and potential for future growth.

Copel's successful privatization has led to increased share value, driven by the potential for improved efficiency and profitability through private ownership. While the outlook is positive, the rapid share price appreciation and high valuation raise caution, especially if leverage remains high. Careful consideration is advised when considering investments in Copel's shares due to potential valuation adjustments.

Paranaense de Energia (ELP) could be a great choice for investors looking to make a profit from fundamentally strong stocks that are currently on the move. It is one of the several stocks that made it through our "Recent Price Strength" screen.

Paranaense de Energia (ELP) could be a solid choice for shorter-term investors looking to capitalize on the recent price trend in fundamentally sound stocks. It is one of the many stocks that passed through our shorter-term trading strategy-based screen.