A record 67 of the 202 companies covered in our Utility Report Card rate a Sell. In some instances, these ratings reflect historically elevated valuations that give investors an opportunity to take profits before the inevitable reversion to the mean. Other Sell calls seek to help investors avoid genuinely weak companies at risk of a major blow-up. Fourteen of these stragglers appear on our Endangered Dividends List.
Although many popular, large-capitalization utility stocks trade within a few percentage points of new all-time highs, the list of potential downside catalysts continues to grow.
Utilities operating in Florida and on the Gulf Coast, for example, must deal with the aftermath of two of the most destructive hurricanes on record, increasing the risk that their response could fall short of customers and regulators’ expectations. (See Utilities and Hurricanes: Responding to Harvey and Irma.)
Concerns about rising interest rates could also provide an excuse to take profits, while the Trump administration has sought to intervene in highly competitive wholesale-electricity markets.
Since the September issue of Conrad’s Utility Investor hit the web, Utilities Select Sector SPDR (NYSE: XLU) has lagged the S&P 500 by 6.5 percentage points—a degree of underperformance that could portend further weakness for the sector.
On the other hand, the market can remain irrational much longer than investors expect. Moreover, all signs point to a strong earnings season for many of the companies in our Utility Report Card.
And buying opportunities still exist at this stage in the cycle. Company-specific developments have prompted us to raise our buy targets on several Portfolio holdings, including this month’s aggressive spotlight. The feature article also identifies which names would benefit from the Trump administration’s proposed intervention in wholesale power markets.
How utilities respond to storm-related outages can have important implications for regulatory relations.
We explore the reasons behind Southern Company's recent underperformance and explain why investors should stick with the stock.
What is the internet of things, and why is this growth theme important to the telecom sector? Find out here.
Kinder Morgan's management team unveiled a plan for the midstream giant to grow its dividend by 60 percent next year. Despite this big talk, the stock remains a show-me story.
The Trump administration has clearly gone all-in on turning the supposed war on coal into a war for coal, but the outcome will depend on electric utilities and power companies. We'll focus on the risks and opportunities associated with government intervention when we attend the Edison Electric Institute's financial conference in November.
Massive distribution cuts from the likes of Plains All-American Pipeline LP have severely damaged midstream master limited partnerships' (MLP) reputation among income investors. But our favorite MLPs trade at favorable valuations and offer exposure to compelling volumetric growth stories.
Sempra Energy's takeover offer for Energy Future Holdings--the fourth bid that brought before the Public Utility Commission of Texas--has a good chance of securing approval, though some adjustments may be necessary.
AT&T and Verizon Communications' second-quarter subscriber additions surprised to the upside, catalyzing a sharp rally in these telecom titans' stock prices. We explain the value of taking a longer view on these names.
Mergers and acquisitions continue apace in the utility sector, but regulators have grown more assertive about ensuring that these deals happen on their terms.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
Harness the tried and true wealth-building power of rising dividends.
Nothing compounds wealth like reinvesting a rising stream of dividends.
Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.