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Quarter-End Insights

4 Utilities Poised to Power Through for Investors

Interest rate fears have weighed on the sector's absolute performance, but utilities' fundamentals remain strong for the most part.

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  • Rising interest rates and investors' shift away from defensive investments left utilities with the worst performance of any major sector in 2013.
  • Regulated utilities are the cheapest they have been in several years, although they still trade at a 6% premium to our fair value estimates. Diversified utilities are slightly more attractive.
  • The frigid winter weather in the Eastern U.S. showed how volatile demand and energy prices can help well-positioned utilities like  Calpine (CPN),  NRG Energy (NRG),  Public Service Enterprise Group (PEG) and  New Jersey Resources (NJR).

 

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