So far in fourth quarter 2018, the Dow Jones Utility Average has returned 5.4 percent. That’s against a -9.3 percent loss by the S&P 500. Utilities are also now well ahead for the full year, after lagging behind for most of it.
I’m not surprised money is flowing into essential service companies, given the level of investor fear of a potential recession, bear market and US/China trade war. And utilities’ strong third quarter results, which I again highlight in the Utility Report Card, confirm their businesses will hold up again if the worst does happen.
On the other hand, this is a world where stock market ownership has been increasingly concentrated into fewer hands. In this case, it’s giant exchange traded funds that are managed by passive strategies, governed by what appear to be remarkably similar algorithms.
That means a lot of money moves in a hurry, and not always for good reason. Favorite stocks like NextEra Energy (NYSE: NEE), for example, have been driven relentlessly higher to nosebleed valuations. Meanwhile, “risk off” moves have tanked most high yielders, most recently Amerigas Partners (NYSE: APU).
NextEra Energy’s (NYSE: NEE) third quarter results are impressive, but the best news is inside that performance.
The final three months of the year are seasonally strong for utility stocks. Since 1969, the Dow Jones Utility Average (DJUA) has posted positive returns in 39 Octobers and 40 Q4s, including (barely) last year.
Southern Company (NYSE: SO) has reached a deal with its partners to keep building two new nuclear reactors at the Vogtle site in Georgia.
Comcast bests Disney in its bid for European entertainment giant Sky: Here's the latest news on this and other current M&A deals.
This week, Dominion Energy (NYSE: D) is set to reap the reward for its bold takeover of Scana Corp (NYSE:SCG) as the South Carolina Public Service Commission has approved the merger.
California's historic Camp Fire, so far has claimed more than 60 lives, and estimates of damage to property are in already in the tens of billions. With super-dry conditions in the west and hurricanes in the east recurring more frequently," US utilities now face an increasing challenge ensuring grid resiliency and safety in a new abnormal of violent weather.
Less than a year ago, investors could buy all the Verizon Communications (NYSE: VZ) they wanted at a price in the low 40s, but shares today are closing in on their all-time highs.
Kinder Morgan Inc (NYSE: KMI) is gathering strength and holds favorable portents for the rest of the sector, but remains largely unappreciated by investors.
Already hard-hit areas of the Carolinas braced today for Hurricane Michael while residents of Florida’s Gulf Coast worked to dig themselves out from possibly the worst weather event ever to hit their region.
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Roger's current take and vital statistics on more than 200 essential-services stocks.