For two weeks now, Utilities has been one of the only bullish Sectors in the market, and as such, that’s where I started to focus my attention for new trades. Utilities is typically a low-risk sector, and coming off of the losses we saw in the first six weeks of the year, I’m still inclined to play it safe—and I’m betting you are, too.
That’s why I’m recommending that you stick with the Utilities sector and buy NextEra Energy, Inc. (NEE) today.
NextEra Energy is an electrical utilities company that operates in the U.S. and Canada. It was founded in 1925, and it now serves more than nine million customers in 27 states and Canada. Together with its subsidiaries—including eight nuclear power units—NextEra has about 46,400 megawatts of generating capacity. It’s one of the country’s leaders in renewable, sustainable energy sources, too.
It’s also a company that I’m especially excited about right now. NextEra has seen its stock move significantly higher over the past 60 days, and in the market we’ve had, you know that this is not an easy feat. Add to this NEE’s increasing daily volume, and this stock could actually be considered a bit of a momentum play—which is something you don’t normally see in a Utility stock.
Of course, for those of you who are familiar with my trading strategy, you know that I always look at the data before I make a move. When I ran NextEra through Turner Analytics database, it received a Fundamental Score of 53 out of 100, a Technical Score of 92 out of 100 and an overall Buy rating.
Breaking it down, NextEra’s fundamentals are hurt by low quarter-over-quarter earnings growth, year-over-year earnings growth and year-over-year revenue growth. However, the company fares much better when looking at multi-year results. The company also provides a good return on equity at a very good stock price, and its institutional ownership is at 73.92%. Plus, it pays a solid dividend of 2.68%.
On the technical side, the stock is doing especially well. Both its Industry (Electric Utilities) and Sector (Utilities) are in a bullish trading pattern, which helps to give NEE shares a little extra momentum.
I’m still seeing many bearish signs in the market (despite our current rally), so I expect people to continue to turn to this low-risk stock through the coming weeks. And I think that will work out very well for us.
I recommend entering NEE at $114 or better. Set your stop at $102.75 and set your near-term target at $117.86.
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