NextEra Energy Sees a Bullish Trend


Jan. 18 2016, Updated 1:35 p.m. ET

Market performance

NextEra Energy (NEE) outperformed utilities last year by posting mildly positive returns. Utilities (XLU) as a sector largely corrected 8% during the year. The possible interest rate hike weighed on utilities last year, leading to their poor performance.

Shares of NextEra Energy bid farewell to 2015 by rising 8% in December alone. Peers Duke Energy (DUK) and Dominion Resources (D) fell ~10% during 2015.

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Technical indicators

Nextra Energy is trading above its 50-day and 200-day moving averages by nearly 4% as of January 15, 2016. This indicates possible upward movement in the stock. Also, a slight upturn in its 50-day moving average indicates a possible bullishness in the short term.

The stock’s relative strength index is hovering near 65 levels as of last month. It currently stands at 63. Relative strength index is a momentum oscillator that takes values between 0 and 100. Movements below 30 mean that a stock is considered to be in oversold territory, while movements of above 70 indicate that a stock is overbought.

Hawaii Electric acquisition

In December 2014, NextEra agreed to buy Hawaiian Electric (HE) for $4.3 billion. NextEra Energy’s acquisition of Hawaiian Electric may still take time, as complications in the deal are not set to ease soon. Residents of Hawaii and Governor David Ige have opposed the approval of the deal’s regulators.

Governor Ige is aiming to achieve 100% electricity in Hawaii using renewables by 2045 and is considered to be a main obstacle in the deal. Morningstar sees a 75% chance that the deal will complete. In November 2015, Wells Fargo lowered its expectation of the deal going through from 75% to 50%.


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