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An Update on the Utilities Sector


Duke Energy, Southern Company, Exelon, Dominion Resources, and NextEra are all stocks to watch.

MINYANVILLE ORIGINAL With all this talk of the fiscal cliff, we wanted to look at the utilities sector. Last week, moved our Buy/Sell rating to a Sell on the utilities sector; this is the only sector currently rated a Sell.

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With the fear of the unknown regarding the potential capital gain tax hike, this sector has seen a pretty big sell-off. Below, we have the ten largest names within the Utilities Select Sector SPDR ETF (NYSEARCA:XLU). For this article, we are only looking at the five largest weighted names: Duke Energy (NYSE:DUK), Southern Company (NYSE:SO), Exelon (NYSE:EXC), Dominion Resources (NYSE:D), and NextEra (NYSE:NEE). Currently, all of these names are rated a sell. As you can see from the graph below, these names are starting to produce compelling forward 2013 yields. However, we are more focused on the preservation of capital than on the yield with the potential unknown tax hike. We would like to see these names move back to a Hold rating before jumping into these names. If you have been reading our articles, you will recall that back on August 6, we suggested selling these names because of where the 10-year note was trading, and we believed this sector was much too extended.

Dominion Resources

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No positions in stocks mentioned.
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