Roger S. Conrad

A “rumored” merger offer from NextEra Energy (NYSE: NEE) did more than ignite a rally in Duke Energy (NYSE: DUK) shares this month. It appears to have breathed new life into the whole utility sector, which with few exceptions has consistently lagged the S&P 500 this year.

A comeback has been overdue for some time. US utilities demonstrated their business resilience in troubled 2020. And they’re poised to accelerate growth by cashing in as the world transitions to suddenly cheap renewable energy and adopts ultra-fast 5-G communications.

PPL Corp’s (NYSE: PPL) potential sale of UK operations remains a threat to its dividend several weeks into the strategic review. Nonetheless, we’re adding the stock to the Aggressive Holdings now for three reasons.

“Keep it simple” is a best practices business maxim that’s far easier to preach than practice. But when a company consistently sticks to it, superior results follow—as they have for nearly 20 years at Michigan electric and gas utility CMS Energy (NYSE: CMS).

Surging prices for anything to do with renewable energy, lagging valuations for virtually everything else: That’s the current state of affairs for the Utility Report Card coverage as companies gear up to release results for now finished Q3.

Essential services companies by their nature provide something that’s always needed. So it takes a major catastrophe this year’s pandemic and economic fallout to really shake up our Utility Report Card coverage universe.

Never buy a company just because it may get a takeover offer—unless you’d be happy owning if there’s never a deal. That’s a rule I’ve followed religiously for over 35 years in this business. It’s kept me away from some obvious targets like the former Sprint, which was ultimately bought after nearly going bankrupt.

Not even rock-solid business resilience to Covid-19 fallout has been enough to swing US electric utilities from laggards to leaders this year. But another wave of mergers and acquisitions just might do the trick.

Everyone loves a bargain. But when a stock trades at a big discount to market or sector averages, there’s always a reason. And to move to a higher price, the company must face its challenges.

Want to invest in transforming developments like renewable energy, 5-G, smart cities and electric vehicle adoption?

You could roll the dice and bet Tesla Inc (NSDQ: TSLA) adds to gains that once approached 500 percent year-to-date. Or you could jump on the companies in the feature article, for compelling yields and far more reliable growth.

More than two-thirds of new power generation capacity installed worldwide this year was wind and solar. And in the US, most was either long-term contracted or entered utilities’ regulated rate base. In fact, all of the world’s leading developers of renewable energy now are utilities, led by America’s top wind and solar producer NextEra Energy (NYSE: NEE).

Clearway Energy (NYSE: CWEN) rewarded our patience last month by restoring quarterly dividends to a rate of 31.25 cents per share. The move initially pushed the stock to a new high in the upper-20s. But it also apparently convinced some investors the big gains are done, a mistake the sellers will likely regret.