Investing

Are Energy and Utility stocks oversold?

  • Last Updated:
  • Feb 19th, 2018 2:47 pm
[OP]
Deal Addict
Jul 3, 2007
3385 posts
3718 upvotes
Toronto

Are Energy and Utility stocks oversold?

Quite the price corrections on some big names like BCE , ENB, ALA , IPL and Telus from their highs. I own these along with some ZWU ETF.

I understand the rate sensitivity thing but the latest selling seems overdone. Does anyone see a rebound in these sectors and names associated with them anytime soon?

Im considering buying more on this latest dip but also wondering if I should wait a bit on the next BOC Rate decision .
18 replies
Newbie
Feb 9, 2016
46 posts
25 upvotes
No point waiting for the BOC rate decision. One cannot predict how that will affect the market. These sectors are pretty cheap, so it's a good time to buy or keep holding.

BCE: I dont like the guidance for 2018
ENB: Earnings/conference call coming out tomorrow. will be interesting to see what happens.
IPL: Good results cheap stock
Telus: Better than BCE
Deal Expert
Jan 27, 2006
17128 posts
9867 upvotes
Vancouver, BC
I agree that the sector is cheap. Unfortunately, I believe it will get cheaper before it gets better as it really doesn't matter what they report as long as investors believe in the current interest rate trend - upwards - especially with news coming out of the US that 10 year government bonds are moving closer to 3%.

I would keep my powder dry (or invest in growth areas that work in a rising interest rate environment) until the rate talk starts to calm down and even rates start to level off. Once that happens, these types of stocks should be dirt cheap and it's worth doing a massive sector rotation out of those growth stocks and into good solid dividend growers like these.
Deal Addict
Dec 3, 2014
2348 posts
1820 upvotes
Ontario
I’m investing for long term so I am SLOWLY adding to these sorts of stocks.

I own BCE and ENB from your list. I added to ENB this week. I am not that tempted on BCE yet but it’s geyting close to an add point for me.

I do agree with the other posters that these stocks are probably not going to rebound significantly anytime soon and may very well keep going lower.
Deal Fanatic
Feb 15, 2006
8882 posts
3381 upvotes
Toronto
Short term, who knows?

Long term, they are at attractive valuation. I added some lately myself.
Sr. Member
Mar 8, 2004
623 posts
180 upvotes
Ismellofhockey wrote: ENB's Q4 earnings just beat estimates. Expect a 5-10% drop ;)
Strong quarterly results combined with yesterday’s announcement on divesting of non core assets, looks like a promising story.
Deal Addict
Feb 26, 2017
2010 posts
2363 upvotes
Not that pre market bids means much, but it currently looks like Enb, enf, IPL and key will all open higher today after their earnings.
Deal Addict
Nov 9, 2013
4048 posts
3885 upvotes
Edmonton, AB
Ismellofhockey wrote: ENB's Q4 earnings just beat estimates. Expect a 5-10% drop ;)
I hope it drops, or at least stays flat. If you look at their Q4 report their cash flow per share is starting to increase, after taking a hit with all the Spectra charges earlier this year and accounting for the massive dilution. I think this signals the worst of the integration is behind the company. The yield is high and sustainable and as long as cash flow grows dividends will grow too.

The longer the share price is suppressed the better it will work out for buy / hold / DRIP investors.
Keep calm and go long
Deal Fanatic
Jun 3, 2009
5075 posts
1035 upvotes
Montreal
Utilities have bounced back lately but it's hard to see if this is a dead cat bounce.
Deal Fanatic
User avatar
Dec 21, 2005
5491 posts
825 upvotes
Markham
Chance7652 wrote: Not that pre market bids means much, but it currently looks like Enb, enf, IPL and key will all open higher today after their earnings.
IPL could not hold onto its gains...guess market still doesn't like their capex plans re: PDH plant
:idea: :) :lol: :razz: :D
Deal Addict
Feb 26, 2017
2010 posts
2363 upvotes
charliebrown wrote: IPL could not hold onto its gains...guess market still doesn't like their capex plans re: PDH plant
62% payout with good FFO growth. The price on IPL very rarely makes sense to me.

I'll take the bump on KEY, ENB and ENF though.
Newbie
Mar 26, 2017
91 posts
111 upvotes
Late to the game but bought into ENB and FTS. Just wanted to say as a noob to the stock market, these forums are very helpful.
Sr. Member
Nov 25, 2009
528 posts
310 upvotes
Vancouver
Interested in shaw and ENF/ENB. hmmmm
Deal Expert
Jan 27, 2006
17128 posts
9867 upvotes
Vancouver, BC
ENB can't by a break these days.... But like I said above, the market doesn't care what it does right now especially with increase yields in US 10 yr bonds and more hikes planned. To make matters worse, the big growth stocks also rebounded so the idea of putting money into utilities is way down many investor's list.

Don't get me wrong - I own ENB so I'm not happy with it's performance but these things happen in a diversified portfolio. I just wouldn't buy any more for the next few months to a year until the interest rate and bond yield story is a lot clearer.
Deal Fanatic
May 22, 2003
6528 posts
3461 upvotes
Vancouver
I hold BCE, ENB, T, and FTS. Share price drop sucks, but allows DRIP to accumulate faster! As long as they keep up with dividend growth, we'll be laughing 30 years from now when we're retired!
Deal Expert
Jan 27, 2006
17128 posts
9867 upvotes
Vancouver, BC
Jermyzy wrote: I hold BCE, ENB, T, and FTS. Share price drop sucks, but allows DRIP to accumulate faster! As long as they keep up with dividend growth, we'll be laughing 30 years from now when we're retired!
Yes. But if you hold off for just a few quarters, I'll bet you can get in on a lower entry point especially after how investors reacted to ENB's good quarter.
Deal Fanatic
Feb 1, 2006
9618 posts
852 upvotes
Muskoka
Added 100 FTS to existing holdings of it on Friday open before 3% bounce. I have owned it for 10+ years and no plans to sell. Happy to finally see some things worth buying. Might add more EMA as well.
Newbie
Jun 28, 2017
85 posts
29 upvotes
Gabriella wrote: Strong quarterly results combined with yesterday’s announcement on divesting of non core assets, looks like a promising story.
And yet...

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