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National Grid Share Price Recovery Gains Steam. Is it a Buy?

Low angle view of electricity pylon, near the river Goyt, Woodbank Park, Stockport, Cheshire, UK.

National Grid share price jumped to the highest point since September 23rd as investors cheered the company’s strong results. NG stock soared to a high of 1,018p, which was the highest level since September 23rd. It has surged by more than 20% from the lowest level this year. Similarly, Centrica share price has also recovered by double-digits in the past few days.

Strong financial results

National Grid stock price jumped sharply as business conditions improved. Its operating profit jumped from £1.48 billion in the first half of 2021 to over £2.2 billion. In the same period, profits before tax jumped to £1.57 billion while the company boosted its dividend per share rose to 17.84p. The company attributed this growth to the strong performance of its UK Electricity Distribution. 

National Grid business did well as it boosted its capital investments to £3.9 billion as it added about 2.5 months of UK Electricity Distribution ownership. The firm also committed about 40 billion pounds in capital investments in the UK.  It made savings worth about £85 million. In a statement, the company’s CEO said:

“We have achieved £225 million of operating cost efficiency savings to date, and this is enabling us to mitigate some inflationary pressures on both the business and our customers. We have also announced funding to help our most vulnerable customers and communities through this winter and next.”

National Grid has been a favored investment for most people for three main reasons. It has a strong market share in the country’s energy sector. Further, it has an attractive dividend yield of 5.06%. Most importantly, it has a large exposure to the United States, where it provides power to New England and New York. While the UK business is having a lukewarm performance, it has benefited from the weaker pound.

National Grid share price forecast

The daily chart shows that the NG stock price has done well in the past few weeks. It has managed to jump from the YTD low of 845p to 1,020p. This is an important level since it was the lowest level on June 22.

National Grid has managed to move above the 25-day and 50-day move above the 25-day and 50-day moving averages. The Stochastic Oscillator has moved above the overbought level. Therefore, the shares will likely continue rising as buyers target the key resistance level at 1,100p. A drop below 1,000p will invalidate the bullish view.

national grid shar price