Utility stocks have been behaving erratically lately. Ever since the market took off, the conventional wisdom said that utility stocks would be the victim of rising interest rates and higher inflation. As investors know, high-interest rates can make utility stocks less attractive. Stock prices of utility companies started to fall in November 2017 and a popular utility stock index fund, the Utilities Select SPDR Fund (XLU) is down 11% since November. In contrast, the S&P 500 Index has climbed 4% in that same time period.
However, it may be time to change the thinking. While interest rates are rising, and it appears that they will continue to do so, the Federal Reserve has given no indication that the pace of those increases will take place at anything other than their current measured pace. This is good news for utility stocks because it means that much of the interest rate increase is already priced into the stock.
The other concern for utility stocks, inflation, is telling a different story. Call it the Amazon effect, but the innovation and the increasing footprint of technology companies are helping to suppress inflationary pressures. If inflation remains relatively contained, it will keep interest rates in check. Both are positive signals for utility stocks.
So if it’s time to get back into utility stocks, what are the best stocks to buy right now? That’s the focus of this presentation. We’re giving you five of our top picks of utility stocks that you should consider for your portfolio.
Click the "Continue to Slide #1" button to view the first company.
