Roger S. Conrad

Economic uncertainty resulting from COVID-19 has shifted utilities’ momentum from positive to negative. And it’s clear we know little now about the ultimate damage to human health and economic growth. But big and sudden declines like this one have historically been followed by mighty rebounds, and huge rewards for those who’ve had the cash and fortitude to buy the right stocks at the bottom. 

Coronavirus (COVID-19) isn’t finished inflicting pain and suffering, particularly on China, and the global economic cost is only beginning to be felt. But one Chinese industry seems to still be moving full-steam ahead.

Cable companies still enjoy success in the B2B market. But these results raise a critical question for the rest of US communications: Who are they taking commercial customers from?

Wholesale political shifts have historically posed great risks for utilities. But despite early concerns, Conservative Income Portfolio holding Dominion Energy (NYSE: D) is apparently faring quite well and scoring big wins

For the eighth year in the past 10, utility stocks finished January in the black. Every time but 2015, they finished the year that way, including a 27.3 percent boost in the Dow Jones Utility Average for 2019.

Conversely, you’d have to go back to 1987 to find a year when a strong January was followed by a sector selloff later on. Every other major DJUA decline was instead preceded by a first month selloff including 2008, 2002, 2001 and 1994.

A big January is therefore a favorable portent for our returns in 2020. So are the calendar Q4 earnings and guidance updates we’ve seen so far for Utility Report Card coverage universe companies, highlighted in the comments of this month’s table.

Aggressive Holding China Mobile (Hong Kong: 941, NYSE: CHL) was our worst performing stock last year. But China’s largest communications company looks set to deliver much stronger returns going forward.

Intense competition, hefty capital spending needs and erratic regulation have made the communications sector an investment minefield. But Conservative Holding Comcast Corp (NSDQ: CMCSA) remains a model of consistency, adding new business while growing cash flow and dividends.

n the early stages of a bull market, it doesn’t matter so much when you buy but what. The key is load up on high quality stocks that are weathering the relevant economic and sector stress test.

Energy pipelines are the highest yielding sector in our Utility Report Card coverage universe. Ironically, after a five-year bear market, dividend risk is actually quite low for the handful of companies and master limited partnerships we track.