Nothing is worse than being too hot at night... We've all experienced it. A hot bedroom can make you toss and turn in bed.
Investing in This Monopoly Is Exciting Right Now
By Carlton Neel, CEO, Chaikin Analytics
Nothing is worse than being too hot at night...
We've all experienced it. A hot bedroom can make you toss and turn in bed. It's hard to sleep when you're not comfortable.
Fortunately, most Americans don't need to deal with this problem often...
You see, electric power in the U.S. is generally reliable. Yes, the "grid" is old overall. So outages do happen from time to time. But the outages don't typically bother us for long.
Of course, the way we got to this reliable power grid rubs some folks the wrong way.
I'm talking about monopolies.
In today's essay, we'll cover why monopolies are good for the power industry. And more importantly, we'll see why right now is an exciting time to invest in these companies...
It's actually much bigger and more important than what happens to the Nasdaq Composite Index or S&P 500. Some of the world's best investors are practically drooling in anticipation. Because this crash will create a slew of 100%-plus opportunities... backed by legal protections that stocks can only dream of. One top analyst believes this could happen within months – and you must prepare now. Get the full story here right away.
Investors are selling their stocks, hoarding cash and gold, and waiting for a repeat of 2008. The consensus is clear: A new crisis is brewing in our nation's economy. But if you're over age 50 – it's not the type of crisis you might expect. And the ramifications for your wealth could be more severe than any other crisis in history. Here's what it means for your money.
Overall, Americans don't like monopolies.
After all, competition drives innovation, fair pricing, and higher-quality products. And a single seller within an industry doesn't have any incentive to make things better.
But sometimes, the cost to build something is so high that a "natural monopoly" occurs. That's how the U.S. government saw the utilities market...
A long time ago, the government realized that efficient electric-power delivery would boost economic growth. And the government needed to invest to build out the "electric grid."
But the government didn't want to get into the power-generation business. So it turned to utility companies...
These utility companies operate as natural monopolies in many locations around the country. Because of that, they could theoretically charge whatever they want. But in order to keep these businesses from getting out of control, the government regulates them.
In short, the government sets the price that an electric company can charge. The regulated rate is typically the price to generate the power plus a reasonable return on investment.
That's why most people think investing in utilities is boring. Nobody expects big returns from a company with predetermined profits.
But occasionally, investing in these monopolies is exciting. And right now is one of those times...
As we've discussed in recent weeks, the markets are in a rough patch. The S&P 500 Index, our broad measure of stocks, is down about 18% this year. And the tech-heavy Nasdaq Composite Index has fared even worse. It's down nearly 30% in 2022.
Suddenly, a "reasonable return on investment" sounds great. That's true even if it's government-mandated.
The Utilities Select Sector SPDR Fund (XLU) is dramatically outperforming the broad market over the past year. It's up more than 10% over that span, while the S&P 500 is down around 7%. Check it out...
XLU includes many of the biggest utility companies in the U.S. It's a "one click" way to buy into some of America's largest government-mandated monopolies – like Consolidated Edison (ED), American Electric Power (AEP), and Exelon (EXC).
Better yet, the Power Gauge is currently "very bullish" on XLU...
It's one of the highest-rated exchange-traded funds in our system today. The Power Gauge rates 16 companies within the exchange-traded fund as either "bullish" or "very bullish" today. And it's only "bearish" on one of XLU's nearly 30 holdings.
To sleep well at night in this market, you need a little more than a cool bedroom. Consider adding some stability to your portfolio with these regulated utilities today.
Good investing,
Carlton Neel
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.18%
7
19
4
S&P 500
-0.74%
74
304
116
Nasdaq
-2.13%
8
67
24
Small Caps
-1.48%
199
1181
509
Bonds
+1.97%
Utilities
+2.04%
16
11
1
— According to the Chaikin Power Bar, Small Cap stocks are more Bearish than Large Cap stocks. Major indexes are mixed.
* * * *
Top Movers
Gainers
AZO
+5.82%
ORLY
+5.02%
LNT
+3.93%
SBAC
+3.88%
LUMN
+3.76%
Losers
NCLH
-11.99%
DXCM
-11.05%
CZR
-10.59%
CCL
-10.30%
RCL
-10.20%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
DXC, NVDA, RJF
No earnings reporting today.
Earnings Surprises
AZO AutoZone, Inc.
Q2
$29.03
Beat by $2.96
INTU Intuit Inc.
Q3
$7.65
Beat by $0.07
A Agilent Technologies, Inc.
Q2
$1.13
Beat by $0.01
BBY Best Buy Co., Inc.
Q1
$1.57
Beat by $0.01
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+2.33%
Real Estate
+0.51%
Energy
+0.47%
Health Care
+0.08%
Financial
-0.67%
Materials
-1.44%
Industrials
-4.12%
Staples
-4.47%
Information Technology
-4.68%
Communication
-5.19%
Discretionary
-9.80%
* * * *
Industry Focus
Homebuilders Services
0
22
12
Over the past 6 months, the Homebuilders subsector (XHB) has underperformed the S&P 500 by -14.36%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #17 of 21 subsectors.
Indicative Stocks
JCI
Johnson Controls Int
RH
RH
MAS
Masco Corporation
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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