Gregg Greenberg
Michael Yogg, portfolio manager for the $539 million (PUGIX Quote - Cramer on PUGIX - Stock Picks)Putnam Utilities Growth & Income fund, says it's going to be hard to match this summer's move anytime soon. Moreover, he warns that the summer winds that moved interest rates lower could easily reverse if inflation data prove stubborn. That point was exemplified last week when first-quarter unit labor costs were revised sharply higher, to 9% from 2.5%, sending stocks lower and bond yields higher.
But even after last week's scare, Yogg says if you "close your eyes and open them a year from now, then you will see this group much higher, mostly because the Fed has already tightened enough." Yogg has proved prescient before. Earlier this year, he correctly counseled investors not to fear interest rate "headwinds" when the 10-year Treasury jumped 30 basis points over the course of March, sending utility stocks, as tracked by the iShares Dow Jones U.S. Utilities Index(IDU Quote - Cramer on IDU - Stock Picks) exchange-traded fund, plunging by 3.3%. Yogg's top picks in the sector are Entergy(ETR Quote - Cramer on ETR - Stock Picks) and Exelon(EXC Quote - Cramer on EXC - Stock Picks), primarily because both companies are in the process of renegotiating contracts to raise power prices. And unlike Baltimore-based Constellation Energy Group(CEG Quote - Cramer on CEG - Stock Picks), which saw a vicious pushback from Maryland lawmakers when it tried to jack up prices after a long period of low rates, Yogg is confident these two companies will have less resistance.
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