Utilities in 2021: Valuation and Momentum

For the most part, 2020 was a year when winning stocks kept moving higher. Underperformers remained stuck in neutral or worse.

Renewable energy companies’ abrupt conversion from value to momentum stocks was by far the most positive story in the Conrad’s Utility Investor coverage universe in 2020. Nine of the top ten performers owned their gains to a sharp uptick in investor enthusiasm for wind, solar, battery storage and electric vehicles.

Conversely, many other essential services companies I track are still one-third or more off their highs of last February. And the result was the largest performance gap in the history of this advisory, some 843 percentage points between the biggest winner and loser.

Toughening up Quality Grade analysis early in the year enabled the portfolios to avoid the worst of the pandemic fallout. But our performance gap was also an uncharacteristically wide at 145 percentage points.