The Utilities Sector is Heating Up — Here’s How to Profit

The benchmark indices extended their losing streak Wednesdsay and at first glance it looks like no sector is immune to the pullback. Well, nearly every sector. As you can see in the heatmap below, the Utilities sector is displaying resilience to Wednesday’s market moves:

This shouldn’t come as a huge surprise to anyone. This winter has been characterized by record cold temperatures in the southern, midwest and northeast portions of the U.S. And as Americans cranked up their thermostats to combat the chill, this has translated to astronomical heating bills.

In fact, in January spending on utilities surged 11.3% over December. We’ll likely see another sizeable jump for February. So with American gas, electric and diversified utilities bringing in more money, what kinds of opportunities are there for investors?

Well, it turns on that not even the bone-chillingly cold winter can redeem most of these companies. In fact, of the 26 large-cap utility stocks I ran through Portfolio Grader, only four made the cut as B-rated buys. And of those, two were located out of the U.S. My highest rated utility stock operates in the U.K…

Britain’s National Grid PLC ADS (NGG) is the sole owner and operator of the electricity transmission system in England and Wales, as well as Britain’s natural gas transmission and distribution system. In addition, the company has expanded to serve the northeastern U.S., and its U.S. subsidiary now accounts for the majority of its overall revenue.

Essentially, NGG operates like a toll road for electricity—it gets paid when electricity or gas moves through its transmission infrastructure. And electrical infrastructure in both the U.S. and Britain are in big need for upgrades, which spells additional opportunity for the company. NGG is a B-rated buy.

A Stock Pickers’ Guide to Utilities in this Market


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