For Immediate Release
Chicago, IL – December 15, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Great Plains Energy Inc. (NYSE: GXP -Free Report ), DTE Energy Company (NYSE:DTE-Free Report),Hawaiian Electric Industries, Inc. (NYSE:HE-Free Report),PPL Corporation (NYSE:PPL-Free Report) andSCANA Corporation (NYSE:SCG -Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday’s Analyst Blog:
5 Impressive Utility Stocks to Buy for 2017
After surging more than 20% over the first six months of the year, utility stocks have declined over the rest of 2016. Investors are increasingly relinquishing their positions in safe options as rotating into cyclical stocks becomes the order of the day. With the Fed preparing to raise rates, the outlook for utilities stocks looks bleak at first glance.
However, investors in search of income will continue to seek out stocks from this sector with strong dividend yields. Additionally, utilities should continue to make up a certain portion of your portfolios in order to safeguard your hard earned gains. Most importantly, the outlook for these stocks may not be all that bleak, which makes it a good idea to pick select options with strong fundamentals.
Consolidation Increases, Growth to Expand Asset Base
Within the sector, the tendency toward consolidation continues to rise. Nearly $54 billion worth of mergers and acquisitions were completed in the conventional utility sector over the first nine months of 2016. According to acclaimed value investor Mario Gabelli, the current number of 81 publicly traded utilities is simply too many. This will ensure that the trend of mergers continues going forward. In such an event, larger companies will see profits increasing as they acquire smaller operators.
Additionally, a projected pickup in economic activity accompanied by large capital investments planned for 2017 will lead to an expansion of utility regulated asset bases. According to industry association Edison Electric Institute (EEI), around 51 utilities are planning to invest more than $90 billion to upgrade facilities and expand their capital bases.
Trump Administration, Lower Costs to Aid Sector
Utilities have benefited significantly from a long period of low interest rates. At 9.57%, the average approved return on equity for the second quarter was the lowest recorded in more than 25 years, according to the EEI. This is also in line with the long term trend of falling ROEs.
However, the average cost of capital for several utilities has declined at an even faster pace. According to a study by New York University released earlier this year, the average cost of capital for 38 utilities was 4.1%. Gabelli has also emphasized recently that the decline in profits is not as drastic when examined relative to the concurrent fall in cost of capital.
Meanwhile, a Trump administration is widely expected to favor utilities. Trump’s promises to deregulate the sector and remove environmental hurdles will be hugely beneficial for utilities. Fewer regulations would result in a reduction in operating costs and an increase in life of power production facilities. Companies with large exposure to coal probably stand to gain the most from such measures.
Utility stocks have struggled in recent months but will continue to remain strong investment choices over the long term. The market will eventually change course at which point they will be good options to protect your profits.
This is why adding select stocks from the sector continues to a prudent option. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks each of which has a Zacks Rank #2 (Buy) and a good VGM score. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Top Picks Vs Sector (Last 3 Months)
Great Plains Energy Inc. (NYSE: GXP -Free Report ) engages in the generation, transmission, distribution and sale of electricity to customers located in all or portions of numerous counties in western Missouri and eastern Kansas.
Great Plains Energy has a VGM Score of A. The company has expected earnings growth of 31.3% for the current year. Its earnings estimate for the current year has improved by 0.5% over the last 30 days. The stock has a dividend yield of 4%. The stock has returned 3.1% over the last three months, outperforming the Zacks Utility Electric Power sector, which has lost 2% over the same period.
DTE Energy Company (NYSE:DTE -Free Report) is a holding company with subsidiaries engaged in regulated and unregulated energy businesses.
DTE Energy has a VGM Score of B. The company has expected earnings growth of 9.3% for the current year. Its earnings estimate for the current year has improved by 0.1% over the last 30 days. The stock has a dividend yield of 3.1%. The stock has returned 7.7% over the last three months, outperforming the Zacks Utility Electric Power sector, which has lost 2% over the same period.
Hawaiian Electric Industries, Inc. (NYSE:HE -Free Report) is a holding company with subsidiaries engaged in the electric utility, banking and other businesses operating primarily in the state of Hawaii.
Hawaiian Electric Industries has a VGM Score of B. The company has expected earnings growth of 6.3% for the current year. Its earnings estimate for the current year has improved by 0.2% over the last 30 days. The stock has a dividend yield of 3.8%. The stock has returned 11.9% over the last three months, outperforming the Zacks Utility Electric Power sector, which has lost 2% over the same period.
PPL Corporation (NYSE:PPL -Free Report) is a diversified utility holding company. Currently, the company serves 10.4 million utility customers in the U.S. and the UK.
PPL Corp has a VGM Score of B. The company has expected earnings growth of 7.4% for the current year. Its earnings estimate for the current year has improved by 1.2% over the last 30 days. The stock has a dividend yield of 4.5%. The stock has returned 0.6% over the last three months, outperforming the Zacks Utility Electric Power sector, which has lost 2% over the same period.
SCANA Corporation’s (NYSE:SCG -Free Report) operations include generation, transmission, distribution, and sale of electricity to retail and wholesale customers in South Carolina.
SCANA Corp has a VGM Score of B. The company has expected earnings growth of 11.4% for the current year. Its earnings estimate for the current year has improved by 1.4% over the last 30 days. The stock has a dividend yield of 3.1%. The stock has returned 5.1% over the last three months, outperforming the Zacks Utility Electric Power sector, which has lost 2% over the same period.
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on GXP - FREE
Get the full Report on DTE - FREE
Get the full Report on HE - FREE
Get the full Report on PPL - FREE
Get the full Report on SCG - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GREAT PLAINS EN (GXP): Free Stock Analysis Report
DTE ENERGY CO (DTE): Free Stock Analysis Report
HAWAIIAN ELEC (HE): Free Stock Analysis Report
PPL CORP (PPL): Free Stock Analysis Report
SCANA CORP (SCG): Free Stock Analysis Report
To read this article on Zacks.com click here.