Tuning out the Noise and Digging into Quarterly Results

Not since 1987 have utility stocks failed to follow up a positive January with full year gains.

To a large extent, January’s move can be chalked up to a mood swing. A month ago, the emerging consensus was utility stocks were poor investments, doomed to suffer from rising interest rates, falling sales due to solar adoption and ultimately a revolt of regulators and customers.

The sudden retreat of emerging markets and their currencies has now taken that narrative off the front page. Rather, utilities are touted as a “hedge” against a repeat of the global market meltdown of 1997-98.

The investment media love a great story told from 30,000 feet. And it’s true that utility stocks were big winners during that crisis, even as the rest of the market cracked.

Current market action, however, is still nothing close to another 1997-98. In fact, there are already some signs of recovery from the recent damage, including the apparently stabilizing Australian dollar. As a result, by this time next month, investors are just as likely to be mesmerized by an altogether different “big story.”

That’s why I’m far more impressed by the strong fourth-quarter results posted by the utilities in my coverage universe..