The volatility in the markets over the past year has been staggering to say the least. Even during these turbulent times, I was always of the belief that utilities were relatively safe. As a result, I wrote about a few stocks in the past seven months or so that I thought were pretty good plays in the current market situation.  For the most part, I was drawn to these stocks because of their potential for growth moving forward, their steady history, and their extremely strong dividends. Although “sure things” do not exist, I was fairly confident in the ability for these stocks to perform well. It has become quite evident that even with strong fundamentals such as those that these stocks possessed there is no guarantee that a stock is going to perform well. I thought that the safe play would be a large cap that boasted a high dividend. This is initially what attracted me to Southern Company (SO) when I first wrote about the company here. On the other hand, I was unsure of how a mid-cap energy stock would perform in the current economy because of volatility. I wrote about one of these, Equitable Corporation (EQT), because I thought it looked very appealing, but I was unsure of whether or not it would perform during such a tough time. Looking back, a few months later, these two stocks have had extremely different results that prove my previous beliefs to be wrong.

Southern Company

Southern Company is one of the largest electricity producers in the United States, distributing to approximately 4.3 million customers. When I first wrote about this company back in October, it appeared to be positioned extremely well for the turmoil that was occurring in the market. It boasted a Beta of just 0.39, ROE of 14.18%, and a dividend yield of 4.69%. On top of this, the company estimated positive EPS growth for both 2008 and 2009. All of these numbers were favorable and gave very little reason to expect anything but success from this company. However, I think there are a few reasons why Southern has underperformed the Utilities SPDR (XLU) by around 9% since last October. The company remained relatively flat through the rest of the year, but has suffered significantly so far in 2009. Southern is down nearly 20% year-to-date, which can mainly be attributed to the decline in the housing market and the overall economy. Decline in the housing market directly affects this company, as it is a major distributor to residential areas.