Utility Stocks With Strong Market Interest: Investment Idea of the Day

In the past month, the S&P 500 Utilities Sector Index has attracted average volume of 15.6 million shares as compared to the 3-month average traded volume of 15.7 million shares. Despite a marginal difference in the index volumes for the two different time periods, the below mentioned stocks have attracted higher interest than the index in terms of volume comparison. While the index declined 0.6% in the past one month, we list below certain U.S stocks which have recorded average gains of 1.8% during the same period.

Meanwhile, the S&P 500 TSX Utilities Sector Index recorded average 1-month trading volume of 2.9 million shares as compared to 2.7 million shares in past 3-months. While the index inched up just 0.2% in the past one month, the Canadian stocks listed below have average gains of 13.5%.   

During the third quarter 2012, the utility sector was the only one among the nine S&P sectors which closed each week of the quarter with a gain. As per S&P data, estimated earnings per share for the utility sector stands at $12.09 for 2012 which is seen rising to $12.55 in 2013, implying a corresponding sector PE of 15.5 and 14.9 for 2012 and 2013, respectively.

As per the U.S. Energy Information Administration (EIA), energy consumption in U.S. will increase 0.3% annually from 2010 through 2035. The majority of new power in this period will be generated from natural gas and renewable sources. As per the EIA report, the rise in demand for energy over the 2010 to 2035 period is because of stepped-up demand from commercial (highest growth of 0.7% annually), industrial, transportation and residential sectors.

Ubika Research has shortlisted ten U.S. and Canadian utility sector stocks which have attracted high market interest in the past one month as reflected by higher one month average traded volume compared to past three months average traded volume. These stocks have significant dividend yields and have positive upside potential based on the forward 12-months estimated target price as per Bloomberg polls.

Disclosure

Except for the historical information presented herein, matters discussed in this document contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements.

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