Is investing in the stocks of generation, transmission, and distribution companies a potentially interesting business?
I see it from three perspectives.
I - The Metrics Perspective
Considering the evolution of the stock price, for example, its moving average (MA), the Relative Strength Index (RSI), and deciding in the classic way: buy when the price is below the moving average and the RSI is below 30%. Sell when the price is above the moving average and the RSI is above 70%. And also evaluate whether the P/E ratio is "consistent." That is, whether the stock price in question is showing an acceptable "multiplier" in relation to earnings per share.
II - The "Economic-Financial" Perspective
Does the company present robust and reliable year-on-year balance sheets that point to a potentially successful future operation? Are the debts at acceptable levels compared to the generation of results? Furthermore, what is the internal rate of return offered by the cash flow generated annually when compared to the investment made?
If the results of these two above perspectives and the following one show good signs, then it would be necessary to analyze the profile of its partners, managers, and the available institutional safeguards (corporate governance, for example).
III - The reliability of the electricity sector Is the sector reliable?
Will the rules be consistent with a competitive environment? Will there be a reduction in illegal activities? Will unnecessary subsidies be eliminated? How will "curtailment" affect the future results of the companies under consideration? Will unplanned interruptions be "behaved"?
Only after this "systemic" evaluation will it be possible to make a good decision!