Investing Topics: Electric Utilities

Few companies attract as much attention when they report quarterly earnings as Telecom’s Big Two: AT&T Inc (NYSE: T) and arch rival Verizon Communications (NYSE: VZ). And the past week has been no exception.

Energen Corp (NYSE: EGN) will sell its Alabama gas distribution utility to Laclede Gas (NYSE: LG), for $1.28 billion in cash plus $320 million in assumed debt. The company will deploy the estimated $1.1 billion in after tax proceeds to further develop its high potential properties in the Permian Basin.

Savvy investors who buy the best utility stocks at the best prices will outperform the index huggers.

Every portfolio has winners and losers. The key is knowing when to let the best performers run, and cut the worst loose.

Thanks again to everyone who tuned in to my second on-line chat for Conrad’s Utility Investor subscribers last week. The full transcript of the 4-hour question and answer session is now available on the CUI website by clicking on the “Events” tab from the home page.

After two consecutive winning months, it’s hard to believe utility stocks had so many detractors to start 2014. And it’s even more difficult to find anyone who will own up to being bearish then or now.

Only two Portfolio holdings have yet to turn in earnings this reporting season. Aggressive Holding ENEL SPA (Italy: ENEL, OTC: ENLAY) will unveil its fourth quarter 2013 numbers on March 11. Conservative Holding Piedmont Natural Gas (NYSE: PNY) releases its first quarter fiscal 2014 results on March 7.

Almost anything can affect stock prices in the near term. Long-term, earnings and dividend growth are what counts.

Not every buy and hold investor has the savvy and steady temperament to be as successful as Warren Buffett. Similarly, not every short seller is insightful and nimble enough to match Jim Chanos’ storied success.

No US utility is better positioned to profit from America’s energy boom than Entergy Corp (NYSE: ETR). The company’s six electric utility units own and operate 22 gigawatts of power plants in Arkansas, Louisiana, Mississippi and Texas.