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Quarter-End Insights

Our Outlook for Utilities Stocks

Finally, utilities with good growth and attractive yields are on sale.

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  • The utilities sector lagged every major sector in 2013 with a 14% total return as the threat of rising interest rates left investors running scared.
  • Regulated utilities are the cheapest they have been in several years, although they still trade at a 6% premium to our fair value estimates. Diversified utilities are slightly more attractive.
  • The frigid winter weather in the Eastern U.S. resulted in a windfall for some of the best-positioned utilities such as Calpine CPN, NRG Energy NRG, Public Service Enterprise Group PEG and NJR Holdings NJR. 


Travis Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.