Utilities generally underperform S&P 500. However, utilities sector being part of an essential infrastructure industry assure investors with steady returns.
Utilities sector could be sub-categorized into Electric Utilities, Natural Gas Utilities, and Water Utilities. Nearly 156 utility stocks listed on NYSE, NASDAQ, and AMEX are tracked for their performance. Yesterday, utility stocks' absolute performance ranged from down to up $0.75. Percentage performance ranged from down 4.95% to up 6.65%.
Utilities sector is in transition as some of the new entrants are redefining the sector. For instance, some semiconductor companies such as Suntech Power Hldgs. Co could be classified under electric utilities. Semiconductor industry is now attractive as there are 58 companies that have a relative strength at or above 80. The 52 week price change of nearly 97 stocks is now in positive territory. So it is now worth considering investing in this sector. In this article I will try to build a portfolio of seven stocks in this sector that I believe could be winners in 2011.
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Out of the 156 stocks, my stock screeners threw up the below given 11 stocks for further consideration. These stocks were - Williams Partners L.P. Common (NYSE:WPZ), El Paso Corporation (NYSE:EP), South Jersey Industries, Inc. (NYSE:SJI), DCP Midstream Partners, LP DCP (NYSE:DPM), El Paso Pipeline Partners LP Co(NYSE:EPB), Pennichuck Corporation(Nasdaq:PNNW), Enterprise Products Partners L.(NYSE:EPD), UGI Corporation Common Stock(NYSE:UGI), Exterran Partners, L.P.(Nasdaq:EXLP), Energy Transfer Equity, L.P. En(NYSE:ETE), and Wisconsin Energy Corporation Co (NYSE:WEC).
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Williams Partners L.P. Common (NYSE:WPZ)
Yesterday WPZ closed trading at , compared to 52 week range of $30.01 and . Its historic peak coincides with 52 week high.
The company operates in two segments, Gas Pipeline, and Midstream Gas and Liquids. The Gas Pipeline segment owns and operates approximately 13,900 miles of pipelines with annual throughput of approximately 2,700 trillion British thermal units of natural gas and delivery capacity of approximately 12 million dekatherms of gas.
I favor this stock due to its low P/E (17.27 – second lowest among natural gas utility stocks). I believe the stock could establish a new 52 week high as its P/E will be rerated by the market. Though this company missed Q3 EPS estimates and Q4 are lower, over the next five years, the analysts that follow this company are expecting it to grow earnings at an average annual rate of 5%.
El Paso Corporation (NYSE:EP)
Yesterday EP closed trading at , compared to 52 week range of $9.55 and .