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3 Low-Beta Utility Stocks to Navigate Through Market Volatility
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Key Takeaways
AWR provides water, wastewater and electricity services with steady earnings growth and dividends.
AEE serves millions across Missouri and Illinois with rising earnings estimates and low beta.
ETR operates 30,000 MW of generation capacity, including 8,000 MW of nuclear fuel capacity.
Tech stocks that had been driving the broader market rally for the past few years are unexpectedly weighing on Wall Street. Not only has the rally come to a halt, but tech stocks have been bleeding over the past few sessions.
Investors have raised concerns over the sky-high valuations of tech stocks and are shunning riskier assets amid the ongoing market volatility.
These stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Tech Stocks Bleed
The Dow, S&P 500 and Nasdaq declined 1.1%, 0.8% and 1.2% respectively, on Tuesday, extending their losses from the previous session. The decline is being led by some of the big tech giants, including NVIDIA Corporation (NVDA - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Microsoft Corporation (MSFT - Free Report) .
Tech stocks have lately come under pressure, especially those with a focus on artificial intelligence (AI). AI stocks have primarily been responsible for the broader market rally in 2024 and this year. A large number of tech companies are making massive investments in AI as they continue to explore the space.
Also, several big tech names have announced major deals for the development of AI and increased their capex. However, investors, after being optimistic about the prospects of AI, have finally been raising concerns over their massive capex plans, a surge in debt financing and sky-high valuations.
These have been denting investors’ sentiment. Also, several other factors, such as high inflation partly because of the fresh tariffs imposed by President Donald Trump, and uncertainty over another rate cut in December, have been weighing on investor confidence.
3 Low-Beta Utility Stocks With Upside
American States Water Company
American States Water Company, along with its subsidiaries, provides fresh water, wastewater services and electricity to its customers in the United States. AWR principally works through its two major subsidiaries — Golden State Water Company and American States Utility Services.
American States Water Company has an expected earnings growth rate of 4.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. American States Water Company has a beta of 0.64 and a current dividend yield of 2.73%.
Ameren Corporation
Ameren Corporation is a utility company that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. AEE serves nearly 2.4 million electric and more than 900,000 natural gas customers.
Ameren Corporation’s expected earnings growth rate for the current year is 7.8%. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the past 60 days. AEE currently carries a Zacks Rank #2. Ameren Corporation has a beta of 0.50 and a current dividend yield of 2.70%.
Entergy Corporation
Entergy Corporation is primarily engaged in electric power production and retail distribution of power. ETR has a 30,000-megawatt (MW) generating capacity, including more than 8,000 MW of nuclear fuel capacity.
Entergy Corporation has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. Entergy Corporation has a beta of 0.63 and a current dividend yield of 2.68%.
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3 Low-Beta Utility Stocks to Navigate Through Market Volatility
Key Takeaways
Tech stocks that had been driving the broader market rally for the past few years are unexpectedly weighing on Wall Street. Not only has the rally come to a halt, but tech stocks have been bleeding over the past few sessions.
Investors have raised concerns over the sky-high valuations of tech stocks and are shunning riskier assets amid the ongoing market volatility.
Given this situation, it would be ideal to bank on defensive stocks, such as those from the utilities sector, to counter the market volatility. These include American States Water Company (AWR - Free Report) , Ameren Corporation (AEE - Free Report) and Entergy Corporation (ETR - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
These stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Tech Stocks Bleed
The Dow, S&P 500 and Nasdaq declined 1.1%, 0.8% and 1.2% respectively, on Tuesday, extending their losses from the previous session. The decline is being led by some of the big tech giants, including NVIDIA Corporation (NVDA - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Microsoft Corporation (MSFT - Free Report) .
Tech stocks have lately come under pressure, especially those with a focus on artificial intelligence (AI). AI stocks have primarily been responsible for the broader market rally in 2024 and this year. A large number of tech companies are making massive investments in AI as they continue to explore the space.
Also, several big tech names have announced major deals for the development of AI and increased their capex. However, investors, after being optimistic about the prospects of AI, have finally been raising concerns over their massive capex plans, a surge in debt financing and sky-high valuations.
These have been denting investors’ sentiment. Also, several other factors, such as high inflation partly because of the fresh tariffs imposed by President Donald Trump, and uncertainty over another rate cut in December, have been weighing on investor confidence.
3 Low-Beta Utility Stocks With Upside
American States Water Company
American States Water Company, along with its subsidiaries, provides fresh water, wastewater services and electricity to its customers in the United States. AWR principally works through its two major subsidiaries — Golden State Water Company and American States Utility Services.
American States Water Company has an expected earnings growth rate of 4.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. American States Water Company has a beta of 0.64 and a current dividend yield of 2.73%.
Ameren Corporation
Ameren Corporation is a utility company that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. AEE serves nearly 2.4 million electric and more than 900,000 natural gas customers.
Ameren Corporation’s expected earnings growth rate for the current year is 7.8%. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the past 60 days. AEE currently carries a Zacks Rank #2. Ameren Corporation has a beta of 0.50 and a current dividend yield of 2.70%.
Entergy Corporation
Entergy Corporation is primarily engaged in electric power production and retail distribution of power. ETR has a 30,000-megawatt (MW) generating capacity, including more than 8,000 MW of nuclear fuel capacity.
Entergy Corporation has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. Entergy Corporation has a beta of 0.63 and a current dividend yield of 2.68%.