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The Zacks Analyst Blog Highlights: Portland General Electric, Ameren, Southwest Gas Holdings, ALLETE and Xcel Energy

Zacks Equity Research
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For Immediate Release

Chicago, IL – October 15, 2018 – 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 Portland General Electric Company POR, Ameren Corporation AEE, Southwest Gas Holdings, Inc. SWX, ALLETE, Inc. ALE and Xcel Energy Inc. XEL.

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Here are highlights from Friday’s Analyst Blog:

Market Jitters Refuse to Die Down: 5 Utilities Picks

After registering record declines on Oct 10, all the three key U.S. indexes witnessed further losses on Oct 11. Higher interest rates, increasing bond yields and renewed fears of a trade war may find investors scurrying toward safe-haven sectors that have already emerged as preferred investments.

One of the most-popular, safe-haven sectors is utilities. This sector comprises companies that provide telephone, gas, water and electricity services. In this context, equity-focused investors looking for stable dividend and interest income can invest in utilities.

Indexes Are In Choppy Ground

The Dow 30 declined by about 1,400 points in the last two trading days. The Nasdaq not only entered correction territory during the day, but also closed the day 9.6% lower than its Aug 29 record. Moreover, the S&P 500 ended in the red for the sixth straight trading day. The broader index finished lower than its 200-day moving average, its first time since April.

Markets are on volatile ground, as evident from the CBOE Volatility Index (VIX), which increased 2 points to 24.98 on Oct 11, the highest settlement since Feb 15. Any reading above the 20 mark indicates a bearish outlook in the equity market.

Rising Rates Spook Investors

A sudden increase in long-term bond yields weigh on the equity market as a rapid increase in bond yields in turn will boost borrowing costs. Earlier, this week, yields on the 10-year Treasury note was at 3.26%, its highest since April 2011. Although, on Oct 11, the 10-year Treasury note decreased by 6 points to 3.158%, it was higher than last month’s 2.979%.

Additionally, the Fed has already raised its federal funds rate for the third time this year. The Fed’s aggressive rate hike approach invited criticism from President Trump, with the President saying that “the Fed is making a mistake.” A high interest rate environment along with continued trade war tensions between the United States and China weighed on investor sentiment and resulted in this two-day carnage.

Why Buy Utilities Stocks?

Among the safe-haven sectors, utilities could be good investments as these generate solid income for their investors. Traditionally, this segment offers protection against a downward trending market, or when there is world strife that will impact the economy globally. 

Investors with a conservative mindset looking for stable current income would do well to consider utilities. They are used as defensive instruments, which protect investments during a market downturn. This is because demand for essential services such as those provided by utilities remains unchanged even during difficult times.

Moreover, most of the utilities maintain a high level of monopoly across their geographic markets. This in turn helps these companies to retain their profitability and continued existence. Constant demand for utilities-related services ensures long-term sustainability for these stocks.

Buy These 5 Utility Stocks

Rising bond yields, increasing interest rates and trade war fears make utility stocks a good investment. The Utilities Select Sector SPDR (XLU) has advanced 0.4% in the last five trading days, becoming the only S&P 500 sector to end in the green over this period.

We have selected five stocks that are expected to emerge relatively unscathed from the bloodbath. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Portland General Electric Company is an integrated electric utility company.  It is involved in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon.

This Portland-based company has a Zacks Rank #1. It has expected earnings growth of 2.51% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 60 days. Portland General Electric has a dividend yield of 3.19%.

Ameren Corporation is a public utility holding company in the United States. It operates through four segments, Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission.

The company is based in St. Louis, MO, and has a Zacks Rank #2. It has expected earnings growth of 14.78% for the current year. The Zacks Consensus Estimate for the current year has improved 1.3% over the last 60 days. Ameren has a dividend yield of 2.78%.

Southwest Gas Holdings, Inc. is a purchaser, distributor and transporter of natural gas in Arizona, Nevada, and California. The utility company operates through Natural Gas Operations and Construction Services segments.

The company is based in Las Vegas, NV, and has a Zacks Rank #2. It has expected earnings growth of 3.45% for the current year. The Zacks Consensus Estimate for the current year has improved 2.2% over the last 60 days. Southwest Gas Holdings has a dividend yield of 2.55%.

ALLETE, Inc. is an energy company. This utility company operates through three segments, Regulated Operations, ALLETE Clean Energy, and U.S. Water Services.

The company is based Duluth, MN, and has a Zacks Rank #2. It has expected earnings growth of 5.12% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 60 days. ALLETE has a dividend yield of 2.89%.

Xcel Energy Inc. is involved mainly in the generation, purchase, transmission, distribution and sale of electricity in the United States. The company operates through Regulated Electric Utility, Regulated Natural Gas Utility and All Other segments.

The company is based Minneapolis, MN, and has a Zacks Rank #2. It has expected earnings growth of 7.28% for the current year. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 60 days. Xcel Energy has a dividend yield of 3.11%.

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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.

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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.

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Portland General Electric Company (POR) : Free Stock Analysis Report
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
Ameren Corporation (AEE) : Free Stock Analysis Report
Allete, Inc. (ALE) : Free Stock Analysis Report
Southwest Gas Corporation (SWX) : Free Stock Analysis Report
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