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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).

 

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