Utility Roundup

As goes January, so goes the year. That old Wall Street adage doesn’t bode well for most of the stock market.

Fourth quarter and full-year earnings normally dominate the news this time of year. And rightly so: They’re what ultimately shape shareholder returns.

The Conrad’s Utility Investor Portfolios officially launched on July 31, 2013. Since that time, the Dow Jones Utility Average is off -2.3 percent, including dividends paid.

My Aggressive Income Portfolio is up by 9.3 percent, while the Conservative Income Portfolio has returned 3.3 percent.

US electric utilities have enthusiastically embraced renewable energy the past few years. That includes companies that have traditionally relied heavily on fossil fuels and nuclear energy.

Will Santa Claus visit utility stock investors this year? The sector was out of the gate quickly to start the fourth quarter of 2013. But concerns about the “tapering” off of Federal Reserve bond buying quickly slowed things down.

Fear of rising interest rates again appears to be triggering selling of utility stocks. I’ve shown over and again that the sector’s so-called interest rate sensitivity is a false relationship over any recent period longer than a few weeks. Consequently, lower prices should be viewed as a buying opportunity for recommended stocks.

Shares of transmission line operator ITC Holdings (NYSE: ITC) have dropped more than 14 percent from the all-time highs reached in early November. The immediate catalyst: A group of industrial users have demanded the Federal Energy Regulatory Commission cut its allowed returns.

Taper talk is heating up again as Federal Reserve Chairman-in-waiting Janet Yellen’s fate is debated on Capitol Hill. Rate hike speculation, however, is having much less impact on essential services stocks than it did this past spring. And one big reason is strong third quarter results.

Only three of the 28 current Conrad’s Utility Investor Portfolio recommendations have yet to report calendar third quarter earnings. That’s plenty of data to identify relevant sector trends, while we assess the health of individual companies.

Since the November issue of Conrad’s Utility Investor went to post, five more portfolio companies have reported calendar third quarter 2013 results. Here are the highlights.