The utilities sector is made up of companies that deal in electricity, gas, water and waste services. Commercial, industrial, governmental and residential customers need these services constantly, so demand does not tend to falter in times of economic recession.
However, the rates companies can charge are regulated, which keeps things affordable for customers which stops utilities companies from jacking up prices too much. Consequently, utilities can be stable investments which will provide reliable but unspectacular returns.
But there are also challenges. Oil and gas prices can change at the drop of a hat, making energy companies a tricky investment. There are also the risks associated with climate change to consider. As carbon emissions become more of an issue, stalwarts of the utilities sector might need to make their practices more climate-friendly or risk being overtaken by emerging green competitors.
Some key players in the utilities sector include:
American Electric Power (NASDAQ: AEP)
NextEra Energy (NYSE: NEE)
Duke Energy (NYSE: DUK)
Southern Company (NYSE: SO)
Dominion Resources (NYSE: D)
Exelon (NASDAQ: EXC)
Xcel Energy (NASDAQ: XEL)
Q4 2021 Utilities momentum stocks
Momentum refers to the speed or rate of change in stock price. Healthy price trends tend to exhibit strong momentum, and price weakens when momentum subsides. The following stocks have been enjoying a rise in momentum in recent weeks. Can their streak continue through Q4?
Maxim Power Corp.
Maxim Power Corp., an independent power producer, engages in the acquisition, development, ownership, and operation of power and power-related projects in Canada. It generates electricity through natural gas fire power stations. MXG stock has significantly benefited from the natural gas price soaring this year.
Pampa Energia S.A.
Pampa Energia S.A.is an integrated electricity company. The company, through its subsidiaries, is engaged in the generation, transmission and distribution of electricity in Argentina. PAM stock is enjoying share price momentum and has enjoyed impressive earnings growth.
Otter Tail Corporation
Otter Tail Corporation, together with its subsidiaries, engages in electric utility, manufacturing, and plastic pipe businesses in the United States. OTTR stock is enjoying share price momentum along with increased sales and earnings.
Q4 2021 Utilities growth stocks
Growth in sales and/or earnings per share indicates a business that is growing. Growth stocks can make very lucrative investments when the share price rises in time with the business expansion. But growth stocks are also risky as investment analysis is based on future price action rather than historical price performance. Famous growth investors include Philip Fisher, T. Rowe Price, and Jim Slater.
Vistra Corp., together with its subsidiaries, engages in the electricity business in the United States. Vistra recently reported a $2 billion buyback program. Its financial metrics for price-to-earnings, price-to-book, and price-to-sales all look reasonable.
Portland General Electric Company
Portland General Electric Company, an integrated electric utility company, engages in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. POR stock could act as an inflation hedge with its reasonable 3.5% dividend yield.
NRG Energy Inc.
NRG Energy Inc., together with its subsidiaries, operates as an integrated power company in the United States. It operates through Texas, East, and West. NRG stock is enjoying strong sales and earnings growth. It’s also displaying signs of momentum.
Q4 2021 Utilities value stocks
Value investing is a prevalent type of stock market investing advocated by Billionaire investor Warren Buffett. When growth stocks are in favor, value stocks tend to be less popular and vice versa. Value stocks should be trading for less than their intrinsic or book value.
PG&E Corporation, through its subsidiary, Pacific Gas and Electric Company, engages in the sale and delivery of electricity and natural gas to customers in northern and central California, the United States. PCG stock is displaying signs of sales growth. It also scores in the value category for P/S, P/E, and P/B ratios.
Companhia Energética de Minas Gerais
Companhia Energética de Minas Gerais, through its subsidiaries, engages in the generation, transmission, distribution, and sale of energy in Brazil. CIG stock is enjoying momentum as well as displaying sales and earnings growth. It also scores in the value category for P/S, P/E, and P/B ratios.
AltaGas Ltd.operates as a diversified energy infrastructure company in North America. The company operates through two segments, Utilities, and Midstream. ALA stock is growing sales and offers shareholders a 4% dividend yield.