The Zacks Analyst Blog Highlights: American Electric, American Water, NextEra, FirstEnergy And Duke

For Immediate Release

Chicago, IL –March 20, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: American Electric Power Company, Inc. (NYSE:AEP) , American Water Works Company, Inc. (NYSE:AWK) , NextEra Energy, Inc. (NYSE:NEE) , FirstEnergy Corp. (NYSE:FE) and Duke Energy Corporation (NYSE:DUK) .

Here are highlights from Tuesday’s Analyst Blog:

5 Standout Utility Stocks for a Durable Portfolio

Upbeat economic growth coupled with a healthy labor market is expected to lift prices of goods and services in the United States. And the Fed is expected to tackle inflation by hiking interest rates. This will invariably lead to an uptick in fixed income yields. Utility stocks, in the meanwhile, better known as bond substitutes, are likely to take a hit. However, this isn’t the scenario as utility stocks have retained their glory.

After all, inflation has remained relatively contained. U.S. consumer prices increased marginally last month, supporting the case for the Fed to hold off further hiking rates in the near future. The consumer price index increased 1.5% from year-ago levels, while core inflation that excludes volatile items like food and energy costs, rose 2.1%. The Fed stated that the central bank will stick to its patient stance on monetary policy as long as core inflation continues to be near 2%.

In fact, analysts polled by International Business Times see no rate hike in Fed’s March meeting. The Fed is expected to leave interest rates unchanged at 2.25-2.50% at its upcoming policy meeting. It’s also worth mentioning that the Fed kept rates unchanged at its Jan 29-30 meeting.

Moreover, utility companies being capital-intensive have high levels of debt. Hence, a low interest rate environment will help such businesses clear debt and book profits. Conversely, higher interest rates along with increased debt, for that matter a steep debt/equity ratio, will impact the credit ratings of these utility operators. If credit ratings go down, a company will find it difficult to borrow funds from the markets at reasonable rates, leading to increased cost of operations.

Coming back to inflation, it shouldn’t rise anytime soon as technology giants continue to suppress inflationary pressure. Just look at how Amazon.com (NASDAQ:AMZN) is building pressure on all consumer products. So, with inflation remaining subdued, utility stocks have huge room to rally. Here’s a list of five of them that are worth a look —

American Electric Power

American Electric Power Company, Inc. engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. This electric public utility holding company is considered one of the industry heavyweights and delivers electricity to more than 5 million customers across 11 states.

American Electric Power currently has a Zacks Rank #2 (Buy) and its overall sales and earnings are climbing at an encouraging pace. In the past 60 days, the company has seen two earnings estimates move north, while one moved south for the current year. The Zacks Consensus Estimate for earnings rose 0.5% in the same period. You can see Zacks Investment Research

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Written By: Zacks Investment Research