Portfolio Article

Most CUI Portfolio stocks have run in place since the April issue. But the past month has been far from uneventful, with 34 of 38 recommended companies reporting their first results and guidance updates since COVID-19 fallout hit the scene.

Since the March issue, I’ve sent Conrad’s Utility Investors readers three action Alerts. Throw in the three Income Insights and two Utility Roundups and that’s quite a bit of extra homework.

A sharp run up to new all-time highs, followed by a steep one-week plunge that’s leveled off for now between the high and low: That’s where the Dow Jones Utility Average has travelled since the February issue posted.

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.

In investing, it’s common for good years to follow good years, and great years often follow average or poor ones. But historically great years like what we’ve just enjoyed at Conrad’s Utility Investor rarely if ever come back to back.

Only four of the 21 current Conservative Holdings trade below our maximum recommended entry point. That’s counting new addition and this month’s conservative focus stock South Jersey Industries (NYSE: SJI).

US/China trade deal optimism has gained steam this month. That’s pushed up the yield on the 10-year Treasury bond to its highest level since late July. And the result has been a mini-sector rotation out of many dividend-paying stocks.

There are about three months remaining in 2019, and much can still happen. But up to now, it’s been a quite profitable year for Conrad’s Utility Investor Portfolios.

A record two-dozen CUI Portfolio companies currently trade above my recommended entry points. That’s to be expected in an environment where investors are seeking safety and yield. And utility stocks offer the added bonus of earning most or all revenue in the US while realizing strong, reliable earnings growth from renewable energy, 5-G and other transforming technologies.

When this issue went to post, not every company in our Utility Report Card coverage universe or model portfolios had released its second quarter numbers. But there’s enough available information to discern several key takeaways.

First, even in these essential service businesses, there’s evidence the US economy has lost some steam. One place that’s shown up is industrial sales of the country’s largest electric utilities.