September is often the cruelest month for the stock market, including utilities. This year, however, nothing has broken the sector’s upward momentum, including devastating hurricanes, uncertainty surrounding tax reform, and a pending trade case that could slow the adoption of solar power in the US.

We’re not complaining; our Portfolio holdings continue to benefit from this momentum.

But the higher bar of expectations that comes with these lofty valuations increases the potential for disappointment.

This month’s update to the Utility Report Card uses our proprietary Conrad’s Utility Investor Value Index to compare current valuations to previous peaks in the run-up to the 2000-01 and 2008-09 meltdowns.

The biggest takeaway from this exercise is that many utility stocks trade at valuations that exceed these highs. Some of this disconnect between fundamentals and valuations likely stems from the growing popularity of passive investment strategies, a phenomenon we explore at length in the feature article.

Nevertheless, we continue to find value in our coverage universe.