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Is There Any Upside Left in Xcel Energy after a Stellar Rally?

Vincent Kruger

Xcel Energy’s Growth May Perk Up If Regulatory Lag Is Addressed

(Continued from Prior Part)

Moving averages

In the graph below, we can see the one-year stock price movement of Xcel Energy (XEL) against its 50-day and 200-day moving averages. As of March 31, 2016, Xcel is trading at a 5% and 13% premium to its 50-day and 200-day moving averages, respectively. Xcel broke above its 50-day moving average in late December last year, and that rally is still on. Technical analysts view such a crossover as a bullish sign. The upward curve of both longer and shorter (200-day and 50-day) moving averages also hints that a positive trend is likely to stay.

Moving averages can be analyzed in two ways. The first method is price crossover, and the second is using two or more moving averages. The first method shows that when a stock price goes above a particular moving average, it’s a bullish sign, and vice versa. On the other hand, according to the second method, when a shorter moving average crosses over a longer moving average, it’s a buy signal for the stock.

Relative strength index

A smart rally in Xcel Energy for the last few quarters has been pushing its RSI (relative strength index) upward. Currently, it stands at 68. RSI is a momentum indicator made up of values between 0 and 100. Movements below 30 are considered in the “oversold” zone. Movements above 70 are in the “overbought” zone. XEL is consistently trading near 65 levels with a couple of trading sessions indicating the resistance of the overbought zone.

Many regulated utility stocks (FXU), including DTE Energy (DTE) and Consolidated Edison (ED), are trading at a premium to their moving averages and nearing overbought zones. Very few utilities lagged behind in this rally compared to broader equities (SPY). But was the rally a consequence of improved Market sentiment for utilities (JXI), or did the financials really get better?

Let’s look at Xcel Energy’s profitability in the next part.

Continue to Next Part

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