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Investing Topics: Utility Stocks

A Preview of the Most Important Conference for Utility Investors

By Roger S. Conrad on Nov. 7, 2016
The Edison Electric Institute's annual financial conference takes place this week. Here's a quick preview of some of the themes we'll dig into at this year's event.

Election 2016: What’s at Stake for Utility Stocks?

By Roger S. Conrad on Oct. 24, 2016
The upcoming gubernatorial elections could have important implications for utilities in these states.

Forget the Fed: Focus on Fundamentals

By Roger S. Conrad on Sep. 29, 2016
While the market fixates on whether the Federal Reserve will hike rates, too many income-seeking investors ignore the danger lurking in their portfolios.

What’s Next for Utility M&A?

By Roger S. Conrad on Sep. 21, 2016
It's been an active year for mergers and acquisitions in the utility sector. We discuss our key takeaways from a major deal that closed ahead of schedule and highlight some of the main themes that will be in play going forward.

Down, But Still Expensive

By Roger S. Conrad on Sep. 12, 2016
Utility stocks’ summer swoon picked up steam, with the Dow Jones Utilities Average down more than 9 percent from its high in early July. The financial infotainment industry has blamed this pullback on speculation that the Federal Reserve could raise interest rates this fall. In reality, the run-up in utility stocks to record valuations set the stage for momentum-seeking investors to use any excuse as an opportunity to take profits. Expect to hear a lot more about US monetary policy and its implications for utility stocks if this correction deepens in coming weeks. But bear in mind that weakness in the US economy likely will prevent the Federal Reserve from further tightening this year and that market history reveals scant correlation between utility stocks and the direction of interest rates. Consider that when the Federal Reserve hiked the benchmark interest rate by 425 basis points between June 2004 and June 2006, the Dow Jones Utilities Average generated a total return of more than 60 percent—almost four times the gain posted by the S&P 500. Concerns about rising interest rates may give investors an excuse to sell utility stocks in the near term, but frothy valuations not seen since the 1960s will be the real cause. At these levels, momentum-seeking investors tend to have itchy trigger fingers. Against this backdrop, we continue to err on the side of conservatism and bide our time for utility and telecom valuations to revert to the mean, at which point will look to deploy the dry powder we’ve accumulated by exiting riskier positions and taking partial profits on big winners.

More Downside to Come?

By Roger S. Conrad on Sep. 12, 2016
The recent selloff in utility stocks has been a boon for our hedge position, but the sector still trades at historically elevated valuations. Investors should stick with our three-part game plan for navigating this challenging market.

A World of Opportunity

By Roger S. Conrad on Sep. 12, 2016
A strong US dollar has weighed on the returns generated by international utility stocks in recent years. But investors should consider looking abroad for high-quality utility and telecom names that trade at reasonable valuations and offer a favorable risk-reward proposition.

Utilities Sell Equity at the Right Time and for the Right Reasons

By Roger S. Conrad on Aug. 26, 2016
The recent spate of equity issuance is yet another sign of frothy valuations in the utility sector, but these moves set the stage for future growth. Investors should bide their time and wait for a pullback to buy our favorite utility stocks.

Barron’s Bashes Utility Stocks for All the Wrong Reasons

By Roger S. Conrad on Aug. 2, 2016
Utility stocks may be overdue for a pullback in the near term, but their future prospects remain undiminished.

Focus on Policy, Not Politics

By Roger S. Conrad on Jul. 10, 2016
Despite all the focus on the US presidential election, gubernatorial races and ballot initiatives at the state level will exert more of an influence on utility stocks. We review the key races and ballot measures as well as their potential implications for utilities in these states.

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ABOUT ROGER CONRAD

Roger S. Conrad needs no introduction to individual and professional investors, many of whom have profited from his decades of experience uncovering the best dividend-paying stocks for accumulating sustainable wealth. Roger b