The Zacks Analyst Blog Highlights: Goldman, American Water, ALLETE, Spire And Pinnacle West

For Immediate Release

Chicago, IL –January 28, 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: Goldman Sachs (NYSE:GS) , American Water Works Company, Inc. (NYSE:AWK) , ALLETE, Inc. (NYSE:ALE) , Spire Inc. (NYSE:SR) and Pinnacle West Capital Corporation (NYSE:PNW) .

Here are highlights from Friday’s Analyst Blog:

4 Utilities Stocks to Counter Slowdown & Shutdown Woes

The utilities sector had a stupendous run in 2018, with Utilities Select Sector SPDR gaining 4.8% in the year. The period between February and December proved to be crucial for the sector as global economic and geopolitical worries, and developments in the White House resulted in a 20% rally.

Analysts expect this momentum to continue in 2019. As a matter of fact, Goldman Sachs estimates the sector will emerge as one of the best performers this year. Goldman Sachs’ Chief Equity Strategist David Kostin thinks equity investments will remain risky in 2019 as the margin of safety is very low due to an elevation in stock valuations, going by historically standards.

Moreover, per a projection from the U.S. Energy Information Administration (“EIA”), retail prices of electricity will continue to increase across all customer segments, which would boost utilities’ top-line growth.

Picking up utility stocks should remain the focus in such circumstances if at all one decides to invest in equity. This is because a global economic slowdown is in the cards this year and under such circumstances, utility stocks have historically outperformed the broader market.

Government Shutdown Keeps Investors on Tenterhooks

On Jan 25, the partial government shutdown entered its 34th day. This trumped the previous record of the longest shutdown in 1995 when the government was closed for a period of 21 days. Further, the Trump administration has provided no visible signs of resumption of normal services.

Democrats have continuously rejected Trump’s $5.7 billion demand for the U.S.-Mexico border wall. Moreover, the Senate held competing votes on Jan 24, to discuss Trump’s proposal to spend the amount on the border wall as well as a Democratic bill that will fund the government through Feb 8, without a wall. Both the bills were rejected by the Senate, further casting a doubt over the end of the longest such shutdown in history.

The Republicans could manage only 50 votes in favor and 47 against, whereas the Democrats stood at 52-44. Both legislations needed 6o votes to pass, however, the failure to achieve the minimum led to no resolution for the shutdown.

IMF Predicts a Global Slowdown

On Jan 21, the International Monetary Fund (IMF) presented a rather gloomy projection for the global economy. The body has revised its global forecast for 2019 and 2020 down to 3.5% and 3.6%, respectively. The last time IMF made such a reduction was back in October, when the ongoing U.S.-China trade war was cited as a major issue.

The international lender stated that a slowdown in Europe and some emerging markets will likely result in a global economic downturn. Further, China’s economic woes and a “No Deal” Brexit were the two other factors that resulted in lackluster projections by the IMF. Per the latest data, China’s economy expanded 6.6% last year. This is the slowest pace of growth that China has witnessed since 1990.

4 Best Choices

The utilities sector in America is undergoing a period of transformation, which is being driven primarily by technological prowess and stiff market competition. Further, players in the electricity business are striving to serve its savvy customers by tapping new technologies every year. This is because such integration leads to increased operational efficiency as well as generation of a needs-based business model.

Utilities are a safe bet during times of market turmoil, as they are relatively stable because of the necessity of the products they offer. In this context, we have selected four utilities stocks that are expected to gain from these factors. These four stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see Zacks Investment Research

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Written By: Zacks Investment Research