The Utilities Sector is Heating Up—Here's How You Can Profit.

The benchmark indices extended their losing streak today and at first glance it looks like no sector is immune to the pullback. Well, nearly every sector. As you can see in the heatmap below, the Utilities sector is displaying resilience to the market moves today:

This shouldn’t come as a huge surprise to anyone. This winter has been characterized by record cold temperatures in the southern, midwest and northeast portions of the U.S. And as Americans cranked up their thermostats to combat the chill, this has translated to astronomical heating bills. In fact, in January spending on utilities surged 11.3% over December. We’ll likely see another sizeable jump for February. So with American gas, electric and diversified utilities bringing in more money, what kinds of opportunities are there for investors?

Well, it turns on that not even the bone-chillingly cold winter can redeem most of these companies. In fact, of the 26 large-cap utility stocks I ran through Portfolio Grader, only four made the cut as B-rated buys. And of those, two were located out of the U.S. My highest rated utility stock operates in the U.K…

Britain’s National Grid PLC ADS (NGG) is the sole owner and operator of the electricity transmission system in England and Wales, as well as Britain’s natural gas transmission and distribution system. In addition, the company has expanded to serve the northeastern U.S., and its U.S. subsidiary now accounts for the majority of its overall revenue. Essentially, NGG operates like a toll road for electricity—it gets paid when electricity or gas moves through its transmission infrastructure. And electrical infrastructure in both the U.S. and Britain are in big need for upgrades, which spells additional opportunity for the company. NGG is a B-rated buy.

A Stock Pickers’ Guide to Utilities in this Market

The Good
Ticker Company Industry Country Total Grade
KEP Korea Electric Power Corp. Electric Utilities South Korea B (Buy)
NEE NextEra Energy, Inc. Electric Utilities USA B (Buy)
NGG National Grid plc Gas Utilities United Kingdom B (Buy)
OKE ONEOK Inc. Gas Utilities USA B (Buy)
The Bad
Ticker Company Industry Country Total Grade
D Dominion Resources, Inc. Electric Utilities USA C (Hold)
EXC Exelon Corporation Diversified Utilities USA C (Hold)
NI NiSource Inc. Diversified Utilities USA C (Hold)
PEG Public Service Enterprise Group Inc. Diversified Utilities USA C (Hold)
SI Siemens AG Diversified Utilities Germany C (Hold)
SRE Sempra Energy Gas Utilities USA C (Hold)
Ticker Company Industry Country Total Grade
AEP American Electric Power Co., Inc. Electric Utilities USA D (Sell)
AES The AES Corporation Electric Utilities USA D (Sell)
DTE DTE Energy Co. Electric Utilities USA D (Sell)
DUK Duke Energy Corporation Diversified Utilities USA D (Sell)
ED Consolidated Edison Inc. Diversified Utilities USA D (Sell)
EIX Edison International Electric Utilities USA D (Sell)
ETR Entergy Corporation Electric Utilities USA D (Sell)
HNP Huaneng Power International Inc. Electric Utilities China D (Sell)
NU Northeast Utilities Diversified Utilities USA D (Sell)
PCG PG&E Corp. Electric Utilities USA D (Sell)
PPL PPL Corporation Electric Utilities USA D (Sell)
XEL Xcel Energy Inc. Electric Utilities USA D (Sell)
The Ugly
Ticker Company Industry Country Total Grade
ENI Enersis S.A. Foreign Utilities Chile F (Strong Sell)
EOC Empresa Nacional de Electricidad S.A. Electric Utilities Chile F (Strong Sell)
FE FirstEnergy Corp. Electric Utilities USA F (Strong Sell)
SO Southern Company Diversified Utilities USA F (Strong Sell)

Sincerely,

Louis Navellier

Louis Navellier

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