This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Time to Buy Utility Stocks

Stocks in this article: AEP AES CNP D DUK ED EIX EXC FE NEE PCG PEG SO

NEW YORK (TheStreet) - With the overall stock market overvalued fundamentally and overbought technically it's time to switch some equity assets into the more defensive but buy-rated names in the Dow Jones Utility Average . There are 13 buy-rated components of the Dow utility average to choose from including Duke Energy (DUK), Con Edison (ED) and Southern Co (SO).

In a momentum market investors have been shying away from dividend stocks, but in my judgment it's time to invest for the dividend income that utility stocks provide. The Dow Utility Average ended Tuesday up 6.5% lagging the S&P 500 which is up 26.4%. The utilities sector is 13.5% overvalued with 12 of 16 sectors overvalued by 24% to 38%.

I give the utilities sector an overweight rating as 90.5% of the 211 stocks in this sector have buy or strong buy ratings according to At ValuEngine we show that 97 stocks have strong buy ratings and 52 are in the utilities sector.

Among the 13 stocks in today's post, three are undervalued by 0.5%, 3.1% and 14.1%. Overall 51.2% of all stocks are overvalued by 20% or more but only two of the components of the Dow Utility Average are overvalued by 24.9% and 30.5%. Five stocks in today's post have losses of 2.2% to 22.5% over the last 12 months, while the other eight are up 1.9% to 35.2% over the last 12 months. The reversion to the mean should help utilities as 10 of the 13 are below their 200-day simple moving averages.

American Electric Power (AEP) ($46.16) is 17.2% overvalued and has a gain of 6.4% over the last 12 months and is just below its 200-day SMA at $46.35 with its 50-day SMA at $46.10. The stock traded as high as $51.59 on May 1 and as low as $41.83 on Sept. 4. My monthly value level is $43.70 with annual pivots at $44.98 and $46.95 and quarterly and weekly risky levels at $47.87 and $49.55.

AES (AES) ($14.49) has a strong buy rating, is 5.9% overvalued and has a gain of 35.2% over the last 12 months and is above its 200-day SMA at $13.09 after setting a multi-year intra-day high at $15.54 on Dec. 4. My semiannual value level is $12.13 with monthly, annual and quarterly pivots at $14.03, $14.38 and $14.81 and semiannual risky level at $15.41.

Centerpoint Energy (CNP) ($23.24) is 24.9% overvalued and has a gain of 16.7% over the last 12 months and is below its 200-day SMA at $23.77. My semiannual value level is $22.34 with monthly and quarterly pivots at $23.71 and $24.03 and semiannual risky level at $26.64.

Dominion Resources (D) ($63.50) is 30.5% overvalued and has a gain of 23.1% over the last 12 months and is above its 200-day SMA at $60.05 after setting an all-time intra-day high at $67.97 on Nov. 18. My quarterly value level is $61.01 with a monthly pivot at $63.77 and semiannual and weekly risky levels at $64.62 and $67.21.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs