Market Overview

Utility And Energy-Focused Fund Recommends NextEra Energy

Share:
Utility And Energy-Focused Fund Recommends NextEra Energy

Jay Rhame, electric utility and natural gas analyst at Reaves Asset Management was on Benzinga’s PreMarket Prep show Monday talking about the utilities sector – among other subjects. The expert said his firm’s favorite utility right now is NextEra Energy Inc (NYSE: NEE), which he classified as “two utilities in one.”

On the one hand, there’s the electric utility segment for South Florida, which services a very big population. On the other hand, there’s the renewable energy generation segment: The company is one of the largest providers of wind energy in the world, plus it is building several solar projects (which have gotten cheap enough, even in the South-East), Rhame explained, adding that this would provide the company with plenty of opportunities in the years to come.

Related Link: Parets: Risk-Reward In Utilities Favors Bears

“If you step back a second, I think that, particularly in the utilities space, investors tend to overpay for yield and underpay for growth,” he stated. “There’s only slight differences, but NextEra can grow their earnings something like 7 percent a year, whereas some of the bigger companies [like] Duke Energy Corp (NYSE: DUK) or Southern Co (NYSE: SO) might only be able to grow 2 or 3 percent.” However, since they offer higher dividend yields than NextEra, “they end up trading for the same multiple even though NextEra’s growth outlook is so much better,” he concluded.

Want to get your questions heard? Join the PreMarket Prep live chat every morning from 8–9:30 to directly ask our hosts and guests what you want to know. You can also listen to the podcast in iTunes, Soundcloud and Stitcher.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Posted-In: Benzinga PreMarket Prep Jay RhameAnalyst Color Commodities Exclusives Markets Trading Ideas Interview Best of Benzinga

 

Related Articles (DUK + NEE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
BGNECLSADowngrades
SWKSMizuhoMaintains90.0
KEMB. Riley FBRDowngrades27.2
ROKGabelli & Co.Downgrades
SSRMB. Riley FBRUpgrades23.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Seagate Is The Lower Cost Way To Play The Cloud Trend, BTIG Says

Your DON Wants To Do You A Favor: A Nifty Mid-Cap ETF