In The Top-Performing Utility Sector, These 4 Groups Stand Out
If you don’t think the market’s still defensive, you haven’t been paying close enough attention to IBD’s 197 industry group rankings. Sure, some growth stocks are working, but many others are not. Meanwhile, defensive areas of the market — namely utility, gold, food and tobacco stocks — continue to hold up. Utilities lagged Tuesday on rate-hike jitters, but the sector is still home to plenty of interesting names. Utilities Select Sector SPDR ( XLU ), the sector’s most popular ETF, is setting up in a tight, flat base with a conventional entry at 49.88. Duke Energy ( DUK ), a top holding of the exchange-traded fund with a dividend yield of 4.1%, is working on a long cup-with-handle base with an 81.49 buy point. At one point Tuesday, it was less than 2% below the buy point. Earnings growth and sales growth have both been uneven in recent quarters, but that’s not uncommon in the utility space. Leadership remains broad in the utility sector, but some groups inside the sector are acting better than others. One of the better-performing groups, recently ranking inside the top 10, is Utility-Water Supply. But two top-rated leaders in the group, small cap Middlesex Water ( MSEX ) and American Water Works ( AWK ), are extended too far past proper buy points. Not to worry, though. The Utility-Diversified group, which recently ranked inside the top 20, boasts several top performers with healthy charts. WEC Energy ( WEC ) is still in buy range from a prior 58.11 entry. It yields 2.8%. In its latest reported quarter, sales jumped 58% from the year-ago quarter to $2.2 billion, helped by its $9.1 billion acquisition of natural gas utility Integrys last year. Also in the group, Avangrid ( AGR ) started trading in mid-December and yields around 4.2%. The company was formed as a result of a merger late last year between Spanish firm Iberdrola and UIL Holdings. At the end of 2015, Avangrid’s renewable energy subsidiary was the second-largest wind producer in the U.S. with 5.6 gigawatts of wind generation capacity, operating 53 wind farms in 18 states. Electricity providers are another area of strength. Great Plains Energy ( GXP ) has been hugging its 10-week moving average as it works on a flat base with a 32.84 buy point. When the company reported Q1 results early this month, earnings and sales growth accelerated from Q4, rising 42% and 4%, respectively. Great Plains currently yields 3.3%. Portland General Electric ( POR ) is retreating back to a 40.57 entry within a three-month flat-base entry. Among gas distributors, One Gas ( OGS ) is working on a flat base with a 62.35 entry. A Composite Rating of 89 is helped by a consistent track record of annual earnings growth since 2012. But in One Gas’ latest reported quarter, sales fell 25% to $508.4 million, hurt by lower rates and warmer weather.