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Tuesday's Energy Stocks: Wall Street, energy sector again gain, except for coal

Wall Street and a majority of energy equities again posted gains in trading on Tuesday, Dec. 13. The SNL Energy Index surpassed its previous day's gains, lifting 0.91% to 279.53. The Dow Jones Industrial Average Index rose 0.58% to 19,911.21, and the S&P 500 Index advanced 0.65% to 2,271.72.

FirstEnergy Corp. climbed 1.77% in below-average trading to close at $31.61, after it contributed 16,097,875 of its common shares in a private placement to its qualified pension trust, the FirstEnergy System Master Retirement Trust. The shares were valued at about $500 million at the time of the distribution.

Shares of PNM Resources Inc. inched up 0.45% on strong volume to settle at $33.35, after it raised its annual dividend rate 10%, to 97 cents per share from 88 cents per share. The company will pay the quarterly common stock dividend of 24.25 cents per share Feb. 13, 2017, to shareholders of record Jan. 23, 2017, according to a Dec. 13 news release.

Exelon Corp. picked up 2.75% on strong volume to close at $35.46.

Innergex Renewable Energy Inc. shot up 1.13% in light trading to end at C$14.29, after it acquired, along with Régime de rentes du Mouvement Desjardins, two wind projects totaling 24 MW in France for about €15.05 million, or C$20.96 million. The wind farms, which hold a 15-year power purchase agreement with EDF Group, are expected to generate annual revenues of about €6.24 million, or C$8.69 million, and adjusted EBITDA of €5.19 million, or C$7.22 million, in 2017.

The Philadelphia Utility Index climbed 1.10% to 617.67, while the SNL Electric Company Index improved 1.13% to 423.92.

In the midstream space, ONEOK Inc. shares earned 0.98% on robust volume to finish at $57.77, despite a downgrade from Barclays analysts. The analysts lowered the company's rating to "equal weight" from "overweight," sounding a note of caution on the valuation of a company whose stock has more than doubled year-to-date.

Christine Cho and colleagues said the gas and oil midstream company is trading at about 14.2 times enterprise value/EBITDA basis as of Dec. 12, compared to a 12.5-times multiple among its peers. Barclays raised its price target for ONEOK to $58 from $49.

Further, shares of its master limited partnership, ONEOK Partners LP, climbed 1.49% on above-average volume to close at $42.81, after the financial services firm increased its target to $45 from $41, based on a projection that ONEOK and the MLP will both trade at a multiple of 13.5x in 2018. "[T]he Oneok complex has to generate ~$180 million of incremental EBITDA above what we are currently modeling in 2018 to justify the premium," they said in a Dec. 13 note.

Heavyweight Enterprise Products Partners LP earned 2.07% in heavy trading to settle at $26.17.

The SNL Midstream Energy Index rose 0.91% to 118.30.

Coal, however, bucked the upward trend in the energy industry, as the SNL Coal Index retreated 2.61% to 81.32. Coal companies which posted biggest losses include Arch Coal Inc., which gave up 2.27% on light volume to close at $81.79, Alliance Holdings GP LP, which shed 4.87% on about average volume to end at $28.74, and Cloud Peak Energy Inc., whose shares sank 3.99% on below-average volume to end at $6.02.

January 2017 natural gas shifted between gains and losses in an ongoing search for direction as participants consider weather and demand prospects and a shrinking natural gas inventory. The contract traded from $3.456/MMBtu to $3.577/MMBtu and at the settle had extended another 3.3 cents lower to finish at $3.474/MMBtu.

Market prices and index values are current as of the time of publication and are subject to change.