Sector Profit Alert: Utilities

June 25, 2009

Stocks Rated “Buy” and “Sell”

One of my favorite utility stocks is Star Gas Partners (SGU), a very small company that gas services to residential and commercial customers in New England. After being upgraded just this week, this stock is now one of the few utilities to rank a “Strong Buy” with an overall A grade in Portfolio Grader. If you look at Portfolio Grader’s monthly rating view (at right), you will see that it has been steadily firming up lately after ranking a D-grade in December 2008. It’s this kind of upward momentum we look for in a stock as a sign that it is a good investment right now.

On the other hand, look at multi-utility stock Dominion Resources (D), which has been steadily on the decline. You’ll see in its monthly rating view that the company was rated a B-grade last fall and received a “Buy” recommendation, but now has steadily weakened to a D-grade, or a “Sell.” These are the kind of companies you want to avoid.

This week’s “Strong Buys” list includes Star Gas and two other red-hot gas utilities I want you to purchase. The list of sells could have been much longer, but I made sure to call out the three stocks I think are the worst in this entire sector:

Utility Stocks Rated “Strong Buy”

• Star Gas Partners (SGU): Gas Utilities industry
• Chesapeake Utilities Corp. (CPK): Gas Utilities industry
• Amerigas Partners (APU): Gas Utilities industry

Utility Stocks Rated “Sell”

• First Energy (FE): Electric Utilities industry
• Constellation Energy (CEG): Independent Power Producers & Energy Traders
• Cascall (HOO): Water Utilities industry

Next Up: Materials

I want you to shake off any preconceived notions you may have about sectors. Utility stocks sound like something your grandfather would invest in for safety and dividends. And while the stocks I’ve marked as buys today actually pay an average 6.7% dividend, these are not stuffy old stocks that you buy and forget about. These stocks have what it takes to make a nice run in the coming weeks and pay you handsomely. The bottom line is that we’re going to search every corner of the market and dig into each sector to find great stocks to buy today for serious profits in the weeks to come.

Please keep this in mind as we enter the materials sector next week because these companies never sound very cutting-edge. They make big rolls of steel or fertilizer, not flashy smartphones or cutting edge drugs that save millions of lives. But make no mistake—these companies provide goods that are crucial to nearly every kind of business in the world, and there’s a lot of money to be made in this sector since they are the first link in the chain.

I’ll keep crunching the numbers over the next week, but I’m excited to say I’ve already identified some picks with tremendous potential. So make sure to check your email inbox on Thursday, July 2, for the next exciting issue of this series. You don’t want to miss it!

Until then,

Louis Navellier

P.S. Remember, you will only get these FREE market-beating trades here in my Thursday eletter. These trades are exclusively for you as a valued member of What’s Working on Wall Street Now. As such, I will not be following our Sector Profit Alert stocks in any other newsletter or on my blog so keep an eye on your inbox each Thursday for my latest buy and sell advice.

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