The revenue results and guidance updates for the second quarter are both recommended for CUI portfolios. The biggest gain: First-class is more than just crushing it into a business. They come better for the next few years. One of my favorite names is Atmos Energy Corp. (ato), wrote Roger Conrad,edit Conrad's utility investor.
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Not all utility stocks on my track make money in 2025. However, the average yield of stocks of the 41 companies represented in the portfolio is 13.4%, far ahead of the large technicians. S&P 500 Index (^spx) Year to present.
(Editor's Note: Roger is speaking 2025 Moneyshow/Tradersexpo Orlandoscheduled from October 16 to 18. Click here to register. )
Atmos Energy Corp. (ATO)
The graph showing the growth of content generated by the stock market AI may be incorrect.
Utilities are providing “choose and shovel” to the ongoing Artificial Intelligence (AI) gold rush. There is reason to doubt some broader forecasts of future electricity demand. But actual company performance and guidance clearly show that growth has been the fastest since the 1950s.
The lowest risk investment is regulated power and gas grids. Today, CAPEX is pre-approved by regulators and is usually recovered based on investments generated by interest rate riders. This was a huge change compared to the 1970s and 1980s, when utilities made all work and expenses in the regulatory decision (as a 20-20 rearview) to allow rates as a “prudential” cost to recover.
It can take years to build a major power transmission line or natural gas pipeline. But most grid projects are completed within a few months, which means companies can closely control costs. It adds up to very predictable and robust earnings growth. Unfortunately, the deals to find energy distributors at a good entrance have been challenging over the past few years.
See: Gold: Why this “minimum technology” asset soars in the technological boom
My favorite thing in the industry is ATO. It only improved its earnings guidance for fiscal 2015 (as of September 30) for the third time this year. This is a great company. But if you buy stocks right away, just know that your yield is only 2%.
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