Short Traders: Why You Should Look at These Utility Stocks
On January 11, 2017, NRG Energy (NRG) had a short interest-to-equity float ratio of 6.7%—the highest among the utility stocks that make up XLU.
NRG Energy rose 45.5% in the past year. It has the highest implied volatility of all the utility companies that make up XLU. In the past week, it rose 8.2%.
On January 11, 2017, NRG Energy had the highest implied volatility among the utility companies that make up the Utilities Select Sector SPDR ETF (XLU).
Zoetis Class A Common Stock rose ~2.1% despite weakness in the sector. Universal Health Services was the bottom performer in the healthcare sector.
The utilities sector fell 3.2% on November 30. NRG Energy (NRG) (+0.27%) and Centerpoint Energy (CNP) (-0.95%) were the top performers.
Institutional investors have decreased their positions in American Water Works (AWK) in the past couple of months.
Water utility ETFs (exchange-traded funds) yield approximately 100–150 basis points more than what water utility companies yield.
The active rally in water utility companies seems precarious at this point in 2016—especially in light of the imminent interest rate hike.
On November 11, 2016, AWK was trading at a 1.5% discount to its 50-day and 200-day moving averages.
Water utilities depend heavily on debt financing due to their capital projects for the longer term, and so company leverages can be useful for investors.
Water utilities are now yielding nearly 2%—roughly half the current yield of electric utilities.
US water utilities have distributed fair dividends for the past few years American Water Works’ dividend growth during the past five years stands at 10%.
US water utilities have witnessed flat sales growth for the past couple of years, primarily due to efficiency programs.
US water utilities have witnessed a cyclical but flat earnings growth pattern in the past couple of years.
Stock appreciation has accounted for a major chunk of water utilities’ returns in 2016, as compared to dividends paid during the same period.
Water utilities have historically traded at PE (price-to-earnings) ratios of 16x–18x. American Water Works is currently trading at a PE ratio of 28x.
US water utilities saw a big stock rally 1H16, rising more sharply than electric utilities. But they’ve lost most of those gains so far in 2H16.
As of September 28, 2016, NRG Energy (NRG) has the highest short interest-to-equity float ratio of all the utility stocks (XLU) at 4.7%.
NRG Energy (NRG) has the highest implied volatility figure of all the utility companies. The stock has fallen 1.3% on a YTD (year-to-date) basis.
As of September 28, 2016, NRG Energy (NRG) has the highest implied volatility figure of all the utility companies. NRG Energy’s implied volatility is 50.2%.