Spanish Energy and Construction Stocks: Navigating Regulatory Crossroads in June

Spain's energy and construction sectors are at a pivotal juncture as regulatory decisions, infrastructure milestones, and cash flow dynamics shape near-term outcomes. For investors in Iberdrola (IBER.MC), Endesa (ELE.MC), Naturgy (NAT.MC), ACS (ACS.MC), and Grifols (GRF.MC), June 2025 presents both opportunities and risks tied to high-stakes developments. Here's how these companies could rise or stumble—and what it means for portfolios.

Nuclear Crossroads: Almaraz's Fate and Its Ripple Effects

The Almaraz nuclear plant, co-owned by Iberdrola, Endesa, and Naturgy, remains the focal point of regulatory uncertainty. The Nuclear Safety Council (CSN) has already greenlit technical extensions for Almaraz-1 (until 2027) and Almaraz-2 (until 2028), but final approval hinges on Spain's Ministry for Ecological Transition. A decision is expected in June, with the government's broader push to phase out nuclear power by 2035 complicating the calculus.

• Catalyst for Iberdrola & Endesa: If approved, the extensions would buy time to transition their portfolios toward renewables, where both companies are aggressively expanding. Their diversified earnings—Endesa's offshore wind projects, Iberdrola's U.S. grid investments—could mitigate nuclear headwinds.
• Risk for Naturgy: As the minority partner in Almaraz, Naturgy's valuation is disproportionately exposed to the plant's fate. A denial could force accelerated decommissioning costs, squeezing margins and cash flow. Investors should watch for volatility.

ACS: Dallas Triumph vs. California Woes

ACS's recent win to design the Dallas Convention Center expansion (a $1.2B contract) contrasts sharply with its struggles in California's high-speed rail project. The latter faces funding cuts, raising concerns about cost overruns and delays.

• Opportunity: The Dallas project signals ACS's ability to secure large-scale U.S. contracts, boosting its construction pipeline. This could offset weaker European infrastructure spending.
• Risk: California's rail project—already delayed—could drag margins if ACS is forced to absorb losses. will reveal whether U.S. wins are outpacing European headwinds.

Grifols: Dividends Resume, but Risks Linger

Grifols, a plasma-derived medicines leader, resumed dividends in Q2 2025 after suspending them during the pandemic. This signals financial stabilization, but challenges persist:

• Positive: A resumption of payouts attracts income investors, and Grifols' strong cash flow from its U.S. blood plasma business supports sustainability.
• Risk: Regulatory scrutiny in pharmaceutical markets and pricing pressures in Europe could limit growth. Monitor to gauge investor sentiment.

Sector Sentiment: A Split Between Renewables and Regulators

Spain's energy mix is shifting decisively toward renewables (now 45% of generation, up from 38% in 2020). For Iberdrola and Endesa, this is a tailwind:

• Iberdrola's Edge: Its 20% stake in U.S. grid operator PNM Resources and offshore wind projects in the UK position it as a global clean energy leader.
• Endesa's Gambit: Its parent company Enel's focus on grid modernization in Spain aligns with EU energy security goals, though reliance on gas-fired plants could face regulatory hurdles.

Meanwhile, construction stocks like ACS face a bifurcated landscape: U.S. wins are a bright spot, but European projects face inflationary pressures and bureaucratic delays.

Investment Strategy: Play the Winners, Avoid the Limbo

• Buy Iberdrola: Its global scale, renewable dominance, and stable cash flows make it a core holding.
• Hold Endesa: Outperform if Almaraz extensions are approved; underperform if not.
• Avoid Naturgy: Until regulatory clarity emerges, its stock is a high-risk bet on a fading asset.
• ACS: Proceed with Caution: Focus on its execution in Dallas—success here could offset California's drag.
• Grifols: Dividend Hunters, Proceed: The payout restart is positive, but long-term growth hinges on U.S. market resilience.

Final Take: June's Regulatory Clock Ticks

With key decisions on Almaraz and infrastructure projects due in June, investors should prioritize companies with diversified earnings and clear paths to cash flow growth. While Iberdrola and Grifols offer stability, ACS and Naturgy remain speculative bets on execution and regulatory mercy. For now, the energy transition is the sector's north star—but construction's fate depends on navigating bureaucratic potholes.

Renewables now dominate, but nuclear's phase-out creates transitional risks.

This analysis underscores the delicate balance between regulatory uncertainty and growth opportunities in Spain's utilities and construction sectors. Investors should stay agile, focusing on companies that thrive in both regulatory clarity and ambiguity.