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Quarter-End Insights

Utilities: Investors Once Again Treating U.S. Utilities as a Safe Haven

Global capital investment in renewable energy, smart grid, safety, and reliability provides a long runway of earnings growth potential, though we only see select values today.

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Utilities are throwing a surprise party going into 2019. After the sector’s first-quarter collapse and lackluster midyear, utilities have roared back and are set to outperform every sector and market indexes in 2018 (Exhibit 1). This is a remarkable turnaround, particularly in the U.S., where utilities were trailing the S&P 500 by 11 percentage points in March but are set to outperform the index by 9 percentage points for the year, topping every other sector.

Exhibit 1: Utilities' first-half swoon flipped into a second-half rally

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

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