U.S. equities are struggling again on Monday, with high-beta technology names moving lower for the second straight session.
The high-profile “FAANG” stocks are getting hit particularly hard in the wake of last week’s big disappointment and fall from grace by Facebook (NASDAQ:FB) — which is resulting in sympathetic selling as hedge funds exit positions.
As a reminder, Facebook was the single most widely held hedge fund position according to Goldman Sachs.
The “risk off” dynamic is fueling a bid in defensive income-focused stocks like utilities. Since the middle of June, when most of the market peaked and stalled, the group has been enjoying a steady bid.
Here are seven to buy now:
Yield-Heavy Utility Stocks: Southern Company (SO)
Southern Company (NYSE:SO) shares are on the verge of enjoying a “Golden Cross” as its 50-day moving average prepares to perk up and over its 200-day average, making an enticing entry point for new buyers. Shares have extended more than 10% off of their June low are and closing in on the highs seen late last year. This returns to the upper end of a trading range going back to 2016.
The company will next report results on Aug. 8 before the bell. Analysts are looking for earnings of 69 cents per share on revenues of $5.3 billion. When the company last reported on May 2, earnings of 88 cents per share beat estimates by four cents on a 10.4% rise in revenues.
Yield-Heavy Utility Stocks: Duke Energy (DUK)
Duke Energy Corp (NYSE:DUK) shares are parked above their 20-day, 50-day, and 200-day moving averages, consolidating the push above its May highs returning to levels not seen since early January. Buy now for a possible move back to its late 2017 highs near $88, which would be a gain of roughly 10% from current levels — on top of the 4.6% dividend yield.
The company will next report results on Aug. 2 before the bell. Analysts are looking for earnings of $1.01 per share on revenues of $5.6 billion. When the company last reported on May 10, earnings of $1.28 beat estimates by 14 cents on a 7.6% rise in revenues.
Yield-Heavy Utility Stocks: American Electric Power Company (AEP)
American Electric Power Company (NYSE:AEP) shares are following a pattern similar to DUK, preparing for a near 10% move back to the late 2017 highs along with a 3.5% dividend yield. An added impetus to the upside comes from a recent initiation of coverage by analysts at Scotia Howard Weil and an upgrade to buy from Goldman analysts on July 20.
The company will next report results on Oct. 25. Analysts are looking for earnings of $1.17 per share on revenues of $4.07 billion. When the company last reported on July 25, earnings of $1.01 per share beat estimates by 13 cents on an 11.1% rise in revenues.
Yield-Heavy Utility Stocks: DTE Energy Company (DTE)
DTE Energy (NYSE:DTE) shares look ready for a near 6% move back to its December highs, which, along with a 3.3% dividend, makes it an enticing buy for investors looking to de-risk their portfolios and pivot away from the dangerous looking big-tech stocks. Shares were initiated with coverage by Scotia Howard Weil analysts on July 24 with a “buy” rating.
The company will next report results on Oct. 24 before the bell. Analysts are looking for earnings of $1.58 per share on revenues of $2.8 billion. When the company last reported on July 25, earnings of $1.36 per share beat estimates by 23 cents on $2.6 billion in revenue.
Yield-Heavy Utility Stocks: Brookfield Infrastructure Partners (BIP)
Brookfield Infrastructure Partners (NYSE:BIP) shares have climbed above their 20-day, 50-day and 200-day moving averages to push back to their early April highs.
A return to the late-December high would be worth another 10% from here, which along with its 4.6% dividend, makes it an attractive pick.
The company was upgraded to “buy” by analysts at Credit Suisse on July 5 as the company finalizes a deal to purchase pieces of Enbridge’s (NYSE:ENB) Canadian natural gas collection and processing businesses. The team sees the potential for BIP management to run the assets more aggressively.
Yield-Heavy Utility Stocks: OGE Energy Corp. (OGE)
OGE Energy Corp (NYSE:OGE) shares have been in a steady, professional-looking rise since February, rising 20% over this time to push to new highs. OGE pays a 3.7% dividend yield. This, along with a likely extension into new record territory, makes the stock look attractive here.
The company will next report results on Aug. 9 before the bell. Analysts are looking for earnings of 57 cents per share on revenues of $592.6 million. When the company last reported on May 3, earnings of 27 cents per share beat estimates by 11 cents on an 8% rise in revenues.
Yield-Heavy Utility Stocks: Aqua America (WTR)
Aqua America (NYSE:WTR) shares have risen above their year-to-date trading range to return to early January highs. A push to the prior record will be worth around a 10% gain from here. That would come on top of the 2.4% dividend. Analyst coverage has been pouring in, with an initiation from UBS back in March.
The company last reported on Aug. 1 after the close. Analysts are looking for earnings of 36 cents per share on revenues of $211.7 million. When the company last reported on May 8, earnings of 29 cents per share matched estimates on a 3.5% rise in revenues.
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