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All street journal's top stock pickers get a lot of attention and what we're doing is bringing each and every one of them and to use the number one names in different sectors all this week today's masters stock picker is energy stores its -- Macquarie capital managing director last year -- top stock picks.
American Water Works jumped a 100% while she rated a device -- she.
Does indeed in which is tiger about great to see if he's having -- again.
Let's take a look at the whole sector -- a lot of people look to utilities for yield at a time and everybody is chasing yield have been.
Legends written about all the yield chasing going on.
A lot of folks are lured by the higher dividend you say don't fall into that trap one.
A look at cautious if you actually performance of utilities here today they've been very strong we see some issues with fundamentals of their business sense.
We worry about historically high valuations and so that's why we're a little -- -- reluctance to chase them.
I'm not saying -- -- and NATO along with utilities but you know when you look at that performance of the last say 24 months that is not intimidating what do you look for each time you're deciding whether to commit your very valuable -- signal to a stock.
We would actually let us -- potential growth and utilities as opposed to -- dividend yield looks of growth in dividends are supposed to dividend yields up.
There are a number of companies that actually do have growth in this no growth sector I think we have.
But does that help pick American Water Works can grow and dividends and earnings up nine to 10% that is unheard of especially if you think about the fact that the yet.
That is the beat -- the risk of this company is about point three -- -- point four that is an amazing.
You know risk reward them for utility for in my opinion why water now by the way.
Plain Vanilla utility and very little if any headlines.
The growth disappear a typical -- utility growth and it grows at around three to 4%.
You must -- heard that that were consuming less and less electricity.
We are consuming less -- -- well but it's already embedded in the and the -- of using a lot more water and fracking and so -- in -- might put -- we all learned some risky way of actually deploying a capital of the water utility that there is a little bit of an angle -- American Water Works but I'm actually not that excited about it.
Because I think it will significantly changed its response.
-- -- It's it's not regulated portion of the operations.
And it requires quick significant capital deployment and that's just not the type of business on paying high multiples are fueled -- two names today energy and PP let's start with energy.
What is it about this company in particular that you like so much right now it both of them both -- -- GNP PL options and -- natural gas prices I'm not saying I'm particularly bullish on natural gas.
If a natural gas price target that we do when we're pretty much along the forward curve from the Russian gas about 4450.
On the -- what Kirk we're just slightly before right now yet but that's just from my -- -- EPL is more of a classic energy and utility holding didn't it ES.
It's big utility in Kentucky and Pennsylvania and the UK and it has a big power generation business and Pennsylvania that nobody pays for.
So I feel like this is a true option on recovery in power prices of gas -- to recover.
So will power prices and the profitability of both coal plants in Pennsylvania when increase when you hear financial journalists including -- sometimes hear Fox Business say.
Hope people -- rotating out of the safety of utilities and into something else -- -- you kind of laugh to yourself because is their position or at least the way you feel.
It everybody's portfolio for some utilities.
I think so just even to balance the portfolio having set that's you know the last thirty days have been pretty brutal for utilities than that.
-- sell in May have been working pretty were pretty well.
Up at today's comments from the Federal Reserve should make investors more comfortable with exposure to safety by dividend yielding -- -- should remain in favor.
Race -- safety there's one thing you say we should avoid right now and that is an entire state of Illinois.
Illinois and about to go belly up.
Now -- the -- -- nothing to do it the economy in the Illinois even though you know that's -- there's been little if any consumption of electricity in that state.
The state is over -- we see it surrounded by.
Wind power and they'll subsidize wind farms are basically weighing on power prices for conventional power companies like -- you do your -- along.
You know these are well managed companies but at the end of the day.
Into the fundamentals are weak and it's kind to recognize that and that power and there that's -- prices Angie stories Hinske at Macquarie it's great to have you congratulations on being a master stock -- aim by the Wall Street Journal thank you.
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