Stockpickers: Centrica, Mony Group, Diageo

Gas and electricity costs an arm and a leg in Britain, as households and manufacturers know to their cost. Despite extensive government support for families and businesses in recent years, domestic and industrial energy bills are among the highest in the world, threatening economic growth and business survival.

The main factor that has driven prices skywards is the UK’s high reliance on imported gas as North Sea production declines and new licences are blocked in the shift to renewable energy. Around two-thirds of the country’s gas requirement is bought on the international market leaving it badly exposed to the high prices and volatility that emerged following the pandemic and Russia’s invasion of Ukraine.

Gas, which is used to generate electricity, sets the price of electricity in the UK even if other sources provide it more cheaply. In contrast, France and Germany rely far less on gas, with more than two-thirds of France’s electricity coming from cheap nuclear sources. A second factor pushing up prices is the nation’s creaking energy infrastructure, which requires heavy investment.

Soaring wholesale prices during the peak of the energy crisis didn’t stop British Gas-owner Centrica from pocketing bumper profits in the period thanks to its own North Sea gas, its ability to store the fuel, and its trading division which exploited market volatility.

Now that profits have dropped sharply as markets have normalised, Centrica is tilting further to renewables and nuclear. It is partnering with US firm X-energy to develop small modular nuclear reactors and has expanded its nuclear portfolio with a 15 per cent stake in one of Britain’s newest nuclear plants, Sizewell C in Suffolk, in a deal which promises predictable returns for many decades and built-in protection against any construction slippage.

BUY: Centrica (CNA)

British Gas owner Centrica has halted its positive run so far in 2026 by announcing a pause to its buyback programme, alongside a significant fall in earnings last year, writes Alex Hamer.

The retail side of Centrica came in ahead of low analyst forecasts for earnings, with an operating profit of £405mn.

The infrastructure part of the business was largely the reason behind a fall in adjusted operating profit from £1.6bn in 2024 to £814mn last year.

Centrica shares pulled back 5 per cent on the results, though they remain up a third in the past year.

Analysts see the net cash position remaining, while cost cuts should help protect margins. But investors will have to rely on a rebound in gas prices for any significant profit growth. The company still offers protection against any wild energy market swings in these turmoil-filled times.

BUY: Mony Group (MONY)

In the past two years, Mony Group’s dividend yield has risen from 5 per cent to 8 per cent, yet its forward price/earnings ratio is down from 15 to 8, writes Arthur Sants.

The MoneySuperMarket price comparison website owner’s falling share price partly reflects the weakening car insurance market.

The rise of AI agents that can automatically compare online prices is threatening the model. In response, Mony has launched a MoneySuperMarket tool accessed through ChatGPT.

Broker Investec believes the sell-off has been overdone. It doesn’t think users will feel confident putting their data into an independent chatbot.

In the long term it is easy to envision a world without price comparison websites, but in the short term Mony’s brand gives it a lot of protection. If insurance premiums start rising, this will also be a boost to the business.

HOLD: Diageo (DGE)

A downgraded outlook and lower dividend saw the stock hand back some recent gains on interim results day, writes Erin Withey.

But HSBC analyst Carlos Laboy suggests the accounts “seem less important than any insights into the turnaround plan”.

For long-term holders the numbers contained few surprises — lower volumes in the US and China drove a 3 per cent decline in organic net sales, and a 3 per cent drop in organic operating profit was blamed partially on trade tariffs.

Chief executive Sir Dave Lewis lamented the “difficult decision” to halve shareholder payouts to 20¢ a share, but said this would create flexibility.

While the shares trade at a chunky discount to their historic average, Lewis is yet to announce significant changes to Diageo’s corporate structure. In the absence of any new “vision”, we remain holders for now.