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Stock Strategist

Our Outlook for the Utilities Sector

Interest-rate-driven jitters have unearthed several buying opportunities.

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Carbon taxes, an aging transmission grid, renewable portfolio standards, demand-side management initiatives, and the possibility of a nuclear renaissance are topics that have donned the covers of several major news publications during the second quarter. They also had utility investors running on a euphoric high as the possibility of permanently higher power prices and an unprecedented infrastructure boom presented opportunities to all players within the industry. Consequently, our fair value estimates were running below market valuations for most of the quarter until an old trump card was pulled from the deck--rising interest rates.

Paul Justice does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.