Analysts’ target prices
Let’s take a look at Wall Street analysts’ mean target prices for utilities in this part. All of the S&P 500 Utilities (XLU) stocks that we have considered offer a handsome potential gain going forward.
Duke Energy (DUK) and Southern Company (SO), the top-rated regulated utilities, offer a potential gain of 16% and 11%, respectively, for the next 12 months. Quarterly earnings, the potential impact of tax reforms, and valuations could be the main drivers for utilities going forward.
Is the risk reasonable?
PPL (PPL) offers a gain potential of more than 18% in a year. PPL has large exposure to the United Kingdom. Volatile exchange rate movements caused by Brexit developments influenced PPL’s market performance in the last few months.
Currently, the three big utilities in California—PG&E (PCG), Sempra Energy (SRE), and Edison International (EIX)—are trading at 52-week lows and offer decent upside potential. Wildfire-related uncertainties might influence PG&E and Edison Internation stock going forward.
SCANA (SCG) stock offers a decent gain potential of 11% in a year. However, SCANA stock seems to be riskier. The stock corrected almost 50% last year. Regulatory uncertainties associated with SCANA’s merger with Dominion could continue to drive SCANA stock down in the short term.
Utility stocks are generally perceived as slow-moving and less interesting. In regards to stable and reliable dividends, these defensives are vital. To learn more, read These Utilities Have Raised Dividends for More than 40 Years.