Can Utilities Add Utility to Your Portfolio?
In today's trading session, the utilities sector has been underperforming its peers. Is this price action a signal of something big? While the rest of the market is making moves to the upside, utilities companies seem to be struggling, which may concern some investors that now is the time to slowly pull out. Other investors may be considering that now is a good buying opportunity.
What is driving the move down, however? What could utilities firms be worried about on a day when everyone else is positive? While the rest of the week was fairly positive, with announcements of a few mergers and dividend increases, today held less than positive news.
German power utility company RWE announced today that it will be shutting down a few power plants in order to maintain profitability. Kinder Morgan (NYSE: KMI) also announced that it dropped the merger offering price for El Paso Corp (NYSE: EP), citing concern about the company's debt situation. Despite the recent bout of negativity, are there any companies that investors may be interested in?
SJW Corp (NYSE: SJW) is a water utilities company with several subsidiaries, all of which provide clients with water and water-based utilities. It is located in various states including California, Tennessee, and Texas. SJW has experienced volatile trading throughout the entire year. Interestingly, it does not appear to be tracking any commodities. Moreover, it is currently trading close to $23.75. Is now a good buying opportunity? Its 52-week high is around $26.
Edenor (NYSE: EDN) is an Argentinian-based electrical utilities company. For some investors, foreign companies may be an attractive investment. Especially in Latin America, where many analysts and pundits believe significant growth is occurring.
For a small-cap company, this could present itself to be a large, lucrative opportunity. If Edenor were to grow significantly, it could like investing in American markets in the 1970s. Utilties are also believed to be one of the powerhouse sectors in emerging markets, as utilities are one of the first few sectors to be developed quickly.
Some analysts and pundits believe that the Energy sector may be entering a golden age, which could be true, given strides taking place in the industry. Significant research and development efforts are being undertaken, and the energy landscape could change over the next few years, as we know it. Investors may want to consider smaller companies in this field if they seek to capitalize on the possible opportunities in energy.
Consumers have a few options when it comes to understanding the US economy. The energy sector is one indicator that could help investors gauge where the economy is heading into the future. Investors should also keep up with real-time news via platforms like Benzinga Pro in order to stay on top of major developments that move markets.
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