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4 Terrific Utility Stocks to Buy Ahead of Q4 Earnings
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The Utilities sector was the best performer for the S&P 500 in 2018. The sector ended in the positive territory despite the benchmark index suffering significant losses. Although Wall Street displayed signs of recovery so far in 2019, several headwinds still persist.
Lingering trade related conflicts between the United States and China, fears of a global economic slowdown, geopolitical uncertainties like Brexit problem and uncertainty about Fed’s monetary stance in 2019 are near-term concerns.
An escalation on any of these fronts will lead to severe market fluctuations. At this stage, it will be wise to invest in defensive sector stocks like utilities to cushion your portfolio.
Immune to Vagaries of Economic Cycle
The Utilities sector is mature and fundamentally strong as demand for such services is generally immune to vagaries of the economic cycle. It's because these companies provide basic services like electricity, gas and water, which can never go out of demand.
Consequently, adding stocks from the utility basket usually lends more stability to a portfolio in an uncertain market condition. Moreover, the sector is known for stability and visibility of its earnings and cash flows. Stable earnings enable utilities to pay out consistent dividends that add to their attractiveness to income-oriented investors.
Utility companies enjoy a reputation for safety given the regulated nature of their business, which lend their revenues a high level of certainty. These companies also benefit from the domestic orientation of their business, which shields them from foreign currency translation issues that have been plaguing the other industries of late.
Notably, in 2018, utility stocks in the S&P 500 gained 4.9%. Except utility, healthcare was the only sector which ended in the green after reporting a gain of 4.7%. The benchmark itself lost 6.2% last year.
Future Looks Bright
Overall, utilities will benefit from the new rates in their service territories, customer growth, effective management and control of expenses through the introduction of new technology. In addition, strengthening of transmission and distribution networks, which lowered outage time, is going to have a positive impact on earnings. Non-availability of replacement of services provided by utilities is the biggest driving force.
Major utility companies have taken initiatives to curb emission from their respective generation portfolio and focus on usage of higher percentage of clean and renewable assets. Utilities are also concentrating on the battery storage project and as per Energy Storage release the battery storage capacity in the United States has exceeded 1 GWh.
Our Top Picks
Utilities are a safe bet during times of market turmoil, as they are relatively stable because of the necessity of the products they offer. This is why picking utilities stocks still look like a smart option. However, picking winning stocks may be difficult.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Ameren Corp. (AEE - Free Report) engages in the rate-regulated electric and natural generation, distribution and transmission businesses in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 15.4%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +2.13% and a Zacks Rank of 1 — our proven model shows that Ameren is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 15.
IDACORP Inc. (IDA - Free Report) engages in the generation, transmission, distribution, purchase and sale of electric energy in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 11.7%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +0.70% and a Zacks Rank of 1 — our proven model shows that IDACORP is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 28.
The Southern Co. (SO - Free Report) engages in the generation, transmission, and distribution of electricity in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 9.5%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +1.77% and a Zacks Rank of 1 — our proven model shows that The Southern is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 20.
Spire Inc. (SR - Free Report) engages in the purchase, retail distribution, and sale of natural gas to residential, commercial, industrial, and other end-users of natural gas in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 14.4%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +0.40% and a Zacks Rank of 1 — our proven model shows that Spire is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 6.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
Image: Bigstock
4 Terrific Utility Stocks to Buy Ahead of Q4 Earnings
The Utilities sector was the best performer for the S&P 500 in 2018. The sector ended in the positive territory despite the benchmark index suffering significant losses. Although Wall Street displayed signs of recovery so far in 2019, several headwinds still persist.
Lingering trade related conflicts between the United States and China, fears of a global economic slowdown, geopolitical uncertainties like Brexit problem and uncertainty about Fed’s monetary stance in 2019 are near-term concerns.
An escalation on any of these fronts will lead to severe market fluctuations. At this stage, it will be wise to invest in defensive sector stocks like utilities to cushion your portfolio.
Immune to Vagaries of Economic Cycle
The Utilities sector is mature and fundamentally strong as demand for such services is generally immune to vagaries of the economic cycle. It's because these companies provide basic services like electricity, gas and water, which can never go out of demand.
Consequently, adding stocks from the utility basket usually lends more stability to a portfolio in an uncertain market condition. Moreover, the sector is known for stability and visibility of its earnings and cash flows. Stable earnings enable utilities to pay out consistent dividends that add to their attractiveness to income-oriented investors.
Utility companies enjoy a reputation for safety given the regulated nature of their business, which lend their revenues a high level of certainty. These companies also benefit from the domestic orientation of their business, which shields them from foreign currency translation issues that have been plaguing the other industries of late.
Notably, in 2018, utility stocks in the S&P 500 gained 4.9%. Except utility, healthcare was the only sector which ended in the green after reporting a gain of 4.7%. The benchmark itself lost 6.2% last year.
Future Looks Bright
Overall, utilities will benefit from the new rates in their service territories, customer growth, effective management and control of expenses through the introduction of new technology. In addition, strengthening of transmission and distribution networks, which lowered outage time, is going to have a positive impact on earnings. Non-availability of replacement of services provided by utilities is the biggest driving force.
Major utility companies have taken initiatives to curb emission from their respective generation portfolio and focus on usage of higher percentage of clean and renewable assets. Utilities are also concentrating on the battery storage project and as per Energy Storage release the battery storage capacity in the United States has exceeded 1 GWh.
Our Top Picks
Utilities are a safe bet during times of market turmoil, as they are relatively stable because of the necessity of the products they offer. This is why picking utilities stocks still look like a smart option. However, picking winning stocks may be difficult.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You could further narrow down the list of choices by looking at stocks that have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Ameren Corp. (AEE - Free Report) engages in the rate-regulated electric and natural generation, distribution and transmission businesses in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 15.4%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +2.13% and a Zacks Rank of 1 — our proven model shows that Ameren is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 15.
IDACORP Inc. (IDA - Free Report) engages in the generation, transmission, distribution, purchase and sale of electric energy in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 11.7%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +0.70% and a Zacks Rank of 1 — our proven model shows that IDACORP is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 28.
The Southern Co. (SO - Free Report) engages in the generation, transmission, and distribution of electricity in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 9.5%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +1.77% and a Zacks Rank of 1 — our proven model shows that The Southern is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 20.
Spire Inc. (SR - Free Report) engages in the purchase, retail distribution, and sale of natural gas to residential, commercial, industrial, and other end-users of natural gas in the United States. The company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 14.4%.
Powered with the right combination of the two key ingredients — an Earnings ESP of +0.40% and a Zacks Rank of 1 — our proven model shows that Spire is likely to beat earnings in the to-be-reported quarter as well. The company is expected to report fourth-quarter 2018 results on Feb 6.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>