Shares of utilities and other essential-service companies have slipped from the highs hit earlier this month, reducing the number of Portfolio holdings that trade above our value-based buy targets to 14.
Whether this wavering marks the start of another leg down for the Dow Jones Utility Average remains to be seen. However, the recent rally creates a high bar of expectations and increases the risk that investors will view any hiccup as an excuse to take profits.
This month’s feature article highlights some of the macro catalysts that could send utility stocks lower.
The current environment favors stock-picking over broad-based exposure, a point underscored by the widening discrepancy between the top and bottom performers in the utility sector.
Although the Dow Jones Utility Average posted a total return of 18.2 percent last year, the index’s top performer beat the worst by 39 percentage points. This performance gap stands at 20 percentage points this year, despite the Dow Jones Utility Average gaining 5.4 percent. A retrenchment to normal valuations would widen this range.
At this point, only 37 stocks tracked in our 205-company Utility Report Card trade below our buy targets. In fact, several dozen best-in-class names that earn A or B Quality Grades in our proprietary system trade at levels where investors should consider taking a partial profit off the table.
We analyze fourth-quarter results from some of the biggest companies in our model Portfolios and explain why one of our Aggressive Income Portfolio holdings surged 11 percent after reporting earnings.
Our basket of junk bonds outperformed in a challenging fourth quarter.
A dividend cut hits investors with a double-whammy, reducing their current income and catalyzing a sharp selloff in the stock. In contrast, a steadily increasing payout eventually will push a company’s share price higher, particularly when it’s supported by the underlying business.
We sift through the pending acquisitions involving companies in our Utility Report Card and highlight some potential takeover targets.
ARPA-E's Energy Innovation Summit, which takes place next week, could give us early insights into President Trump's energy policies.
Could Donald Trump's support for the controversial Keystone XL and Dakota Access pipelines foment local opposition to other energy projects?
The December 2015 issue of Conrad's Utility Investor emphasized the importance of diversification to generating differentiated returns in 2016. Despite a few laggards, that article's picks outperformed, generating an average total return of 18.6 percent. This year, we opted to highlight 10 trends that should drive outperformance.
What does the utility sector’s budding relationship with big tech mean for investors?
The Edison Electric Institute's annual financial conference takes place this week. Here's a quick preview of some of the themes we'll dig into at this year's event.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
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Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.