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4 Low-Beta Utility Stocks to Buy Amid Sinking Consumer Sentiment
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Inflation has been declining steadily and hopes of a rate cut have brightened over the past month. However, Americans don’t appear confident about the economy as inflation remains quite elevated from the Federal Reserve’s 2% target.
Although consumers are hopeful that inflation will ease over the next year, consumer sentiment hit an eight-month low in July. The University of Michigan’s preliminary consumer sentiment index showed that consumer sentiment came in at 66.0 in July compared to June’s final reading of 68.2.
July’s reading was also sharply below the consensus estimate of 68.5. The survey’s outlook for inflation expectations over the next year fell to 2.9%. The sub-index tracking inflation expectations over the next five years also fell to 2.9%. However, it stayed above the pre-pandemic range of 2.2-2.6%.
Consumers have been complaining about high prices despite being hopeful that inflation will ease over time.
The consumer price index (CPI) dipped 0.1% sequentially in June after remaining unchanged in May. This was also the first time that monthly inflation declined since May 2020.
Year over year, CPI increased 3% in June after advancing 3.3% in May, the smallest increase since June 2023.
Core CPI, which excludes the volatile food and energy costs, increased 0.1% month over month in June and 3.3% from the year-ago levels, beating the consensus estimate of a rise of 0.2% and 3.4%, respectively.
Although the decline in inflation has raised hopes of a rate cut in September, which has further fueled the Wall Street rally, price pressures continue to dent consumers’ confidence and sentiment.
This can turn markets volatile again, which could continue for a longer period.
Our Choices
Given this situation, it would be wise to invest in defensive stocks. We have chosen four stocks from the utility sectors with a low beta (beta greater than 0 but less than 1), a high dividend yield and a favorable Zacks Rank.
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.4 million customers in more than 1,400 communities in eight states, from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 72,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 10.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 60 days. ATO presently has a Zacks Rank #2. Atmos Energy has a beta of 0.67 and a current dividend yield of 2.66%.
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edisonhas an expected earnings growth rate of 5.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 60 days. ED presently has a Zacks Rank #2. Consolidated Edisonhas a beta of 0.34 and a current dividend yield of 3.68%.
National Fuel Gas Company has natural gas assets located in the prolific Appalachian basin and oil-producing assets in California. NFG operates through the following segments, namely Exploration and Production and Other, Pipeline and Storage and Gathering, and Utility and Energy Marketing.
National Fuel Gas Company has an expected earnings growth rate of 0.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.2% over the last 60 days. NFG currently sports a Zacks Rank #1. National Fuel Gas Company has a beta of 0.62 and a current dividend yield of 3.63%.
FirstEnergy Corp. is a diversified energy company. Through its subsidiaries and affiliates, FE engages in the transmission, distribution and generation of electricity.
FirstEnergy Corp has an expected earnings growth rate of 5.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. FE currently has a Zacks Rank #2. FirstEnergy Corp has a beta of 0.49 and a current dividend yield of 4.37%.
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4 Low-Beta Utility Stocks to Buy Amid Sinking Consumer Sentiment
Inflation has been declining steadily and hopes of a rate cut have brightened over the past month. However, Americans don’t appear confident about the economy as inflation remains quite elevated from the Federal Reserve’s 2% target.
Although consumers are hopeful that inflation will ease over the next year, consumer sentiment hit an eight-month low in July. The University of Michigan’s preliminary consumer sentiment index showed that consumer sentiment came in at 66.0 in July compared to June’s final reading of 68.2.
July’s reading was also sharply below the consensus estimate of 68.5. The survey’s outlook for inflation expectations over the next year fell to 2.9%. The sub-index tracking inflation expectations over the next five years also fell to 2.9%. However, it stayed above the pre-pandemic range of 2.2-2.6%.
Consumers have been complaining about high prices despite being hopeful that inflation will ease over time.
The consumer price index (CPI) dipped 0.1% sequentially in June after remaining unchanged in May. This was also the first time that monthly inflation declined since May 2020.
Year over year, CPI increased 3% in June after advancing 3.3% in May, the smallest increase since June 2023.
Core CPI, which excludes the volatile food and energy costs, increased 0.1% month over month in June and 3.3% from the year-ago levels, beating the consensus estimate of a rise of 0.2% and 3.4%, respectively.
Although the decline in inflation has raised hopes of a rate cut in September, which has further fueled the Wall Street rally, price pressures continue to dent consumers’ confidence and sentiment.
This can turn markets volatile again, which could continue for a longer period.
Our Choices
Given this situation, it would be wise to invest in defensive stocks. We have chosen four stocks from the utility sectors with a low beta (beta greater than 0 but less than 1), a high dividend yield and a favorable Zacks Rank.
These are Atmos Energy Corporation (ATO - Free Report) ,Consolidated Edison, Inc.(ED - Free Report) , National Fuel Gas Company (NFG - Free Report) and FirstEnergy Corp. (FE - Free Report) . Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.4 million customers in more than 1,400 communities in eight states, from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 72,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 10.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 60 days. ATO presently has a Zacks Rank #2. Atmos Energy has a beta of 0.67 and a current dividend yield of 2.66%.
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edisonhas an expected earnings growth rate of 5.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 60 days. ED presently has a Zacks Rank #2. Consolidated Edisonhas a beta of 0.34 and a current dividend yield of 3.68%.
National Fuel Gas Company has natural gas assets located in the prolific Appalachian basin and oil-producing assets in California. NFG operates through the following segments, namely Exploration and Production and Other, Pipeline and Storage and Gathering, and Utility and Energy Marketing.
National Fuel Gas Company has an expected earnings growth rate of 0.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.2% over the last 60 days. NFG currently sports a Zacks Rank #1. National Fuel Gas Company has a beta of 0.62 and a current dividend yield of 3.63%.
FirstEnergy Corp. is a diversified energy company. Through its subsidiaries and affiliates, FE engages in the transmission, distribution and generation of electricity.
FirstEnergy Corp has an expected earnings growth rate of 5.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. FE currently has a Zacks Rank #2. FirstEnergy Corp has a beta of 0.49 and a current dividend yield of 4.37%.