Roger S. Conrad

Buy American, buy safety and buy yield: Those are three powerful upside drivers for utility stocks this spring, as major sector averages have made one new high after another.

Investors who choose to run with the bulls now, however, should have an extra ounce of caution. Not only are utility stock valuations at levels we haven’t seen since late 2000.

But as I point out in the Feature article, much of the buying power behind the rise doesn’t actually stem from decisions made by individual investors or even money managers. It’s the result of buy signals for algorithms that control vast and growing pools of “passively managed” money.

On May 24, the Dow Jones Utility Average made a new all-time high. Over the next week or so it followed the S&P 500 lower, testing its 50-day moving average on several occasions before breaking out to another new high last week. That’s a stark contrast with the broad market, which has been alternatively puncturing support and failing to break resistance.

Management’s rationale is identical to that of other telecoms cutting the past couple years. It needs more cash to tackle a wall of pending debt maturities, even as capital spending needs pick up for next generation 5-G wireless and competition pressures 4-G revenues.

There’s nothing quite like the adrenaline rush from a big short-term gain in a stock. My son Nate enjoyed that feeling this week by picking up on a Utility Report Card recommendation of El Paso Electric (NYSE: EE). This week, the stock surged when a JP Morgan fund offered $68.50 per share in cash for the company.

From its humble beginnings as the old Southwestern Bell, AT&T Inc (NYSE: T) emerged from the competitive free-for-all following 1996 deregulation as one of America’s big two telecoms. And revenues, earnings and dividends have risen consistently ever since.

Less than two decades ago, AES Corp (NYSE: AES) was one false step from bankruptcy. That’s when management dramatically slashed debt, streamlined its portfolio and modernized its fleet and systems with the most advanced power technology.

Greens and other environment-first advocates have emerged as a powerful bloc in European parliamentary elections, garnering a heavy influence on the ruling Centrist parties which will impact Europe's energy policies and providers.

Get big or go home: The "Big Four" will likely soon become the "Big Three."

Trade wars are wealth destroyers. The longer these disputes continue and the more actions governments take, the greater the danger of severe damage to the economy and stock market. There are, however, a handful of companies in position to actually win from this worst case.