The $48 billion leveraged buyout of the former TXU Corp by KKR & Co. LP (NYSE: KKR) and other private-equity outfits set record in 2007. Now, the company's impending bankruptcy underscores the risks of looking for a quick buck in the utility sector.
It’s been barely two weeks since Washington avoided the first federal government default, at least since the Articles of Confederation were in force. The autumn rally in stocks, however, actually began during the heat of the crisis.
The trigger was long overdue recognition the Federal Reserve isn’t going to abandon loose money until the economy is strong enough to handle it. All the “taper” talk that clogged the airwaves for months proved to be meaningless blather.
That’s hardly the first time conventional wisdom has proven disastrously wrong for the investors who bet on it.
The silver lining is resulting volatility was a solid opportunity to buy good stocks cheap. And thanks to that, we’ve already seen sizeable gains for the Conrad’s Utility Investor Model Portfolios, though they’ve only been around three months.
AT&T Inc (NYSE: T) was the only Conrad’s Utility Investor Portfolio pick to report numbers last week. Takeaway one is quite positive: The results followed closely those of arch-rival and co-Big Two US communications company Verizon Communications (NYSE: VZ).
August was a down month for utilities and other essential services companies—likewise the broad stock market. That continues a trend beginning in late April, when fears first stirred of an end to Federal Reserve easing.
Since then, the Fed has not changed policy. But the markets have acted as though much higher interest rates are a done deal. The yield on the benchmark 10-year Treasury Note yield has nearly doubled. And expectations are we’ll see it at 4 to 5 percent, as the precursor to a dramatic, across the board rise in rates.
What telecom names boast the safest dividends? The industry’s Big Four take the title, hands down. Among the smaller fry, Consolidated Communications (NSDQ: CNSL) is in the best shape--one of the reasons short interest in the stock is lower than its peers that trade with reasonable liquidity.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
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Roger's current take and vital statistics on more than 200 essential-services stocks.