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National Grid’s share price has seen a strong recovery in recent days as investors take advantage of the recent dip. The stock is currently trading at 1,123p, about 10% higher than its lowest point this month, bringing the company’s market cap to around £49 billion.
National Grid is one of the world’s largest utility companies, operating in several key segments, including UK electricity transmission, distribution, system operation, as well as in New England, New York, and NGV. The electricity transmission division is its largest revenue generator, bringing in over £2 billion.
In May, the company reported solid financial results for the fiscal year ending in March. Operating profit increased by 82% to more than £4.3 billion, while profit before tax rose to over £3.44 billion. The dividend per share also saw a 4% increase to 50.97p.
This strong performance came during a particularly busy year for National Grid. The company invested £7.9 billion to acquire Western Power Distribution, the largest distributor in the UK. It also agreed to sell a 60% stake in National Grid Gas to Macquarie Asset Management and British Columbia Investment, with the sale expected to be completed this year. Additionally, National Grid sold its 50% stake in St William Homes JV.
The share price has also benefited from the company’s ambitious investment plans. National Grid intends to invest £54 billion to upgrade the UK’s energy network, with a focus on offshore wind energy, aligning with the government’s goal of achieving 50 gigawatts of offshore wind power by 2030. Part of this investment will be funded by the electricity transmission charges paid by customers.
The daily chart indicates that National Grid’s stock has been on a steady rebound, moving above the ascending trendline and slightly surpassing the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has also risen above the neutral point at 50.
The stock is currently testing the 1,150p level, which aligns with the chin of a double-top pattern. Given this break and retest pattern, there’s a possibility that the shares could resume their downward trend and revisit July’s low of 1,023p. However, if the stock manages to move above the 1,150p resistance level, it would invalidate this bearish outlook.