On September 21, the Utilities Select Sector SPDR ETF (XLU) had an implied volatility of 13%, marginally higher than its 15-day average. A stock’s implied volatility represents investors’ unease. Rising volatility is generally related to a fall in a stock’s price.
The implied volatilities of Southern Company (SO) and Dominion Energy (D) were ~14% each recently. Top utility stocks Duke Energy (DUK) and NextEra Energy (NEE) also exhibited volatilities of close to those levels. SPY is making all-time highs, and its implied volatility levels are touching levels of below 8%, some of the lowest this year.
NextEra Energy, Duke Energy, Southern Company, and Dominion Energy are the four top utilities in the country by market cap. You can read how they’re positioned going forward in Market Realist’s How the Big Utilities Are Placed for the Future.
Let’s take a look at utilities’ analyst recommendations and price targets in the next article.