It has been a rough start to the year with major indexes plummeting across the board. This has forced investors to look to safer avenues for investments,
like those in the utility space.
Stocks here were initially shunned on fears of rising rates, but those worries appear to be distant memories now, as the 10 year Treasury bond hits 2% at
time of writing. This is making many investors rethink their position on the low beta utility world including companies like Sempra Energy ( SRE).
Sempra Energy in Focus
Sempra might not be the most well-known utility company out there but it is no small cap either with a market cap of over $23 billion. But you might be
more familiar with the company if you live in Southern California as Sempra offers natural gas and electricity to the broader San Diego and Los Angeles
markets, though it also has a global division as well.
Either way, the real promise of the company lies in its lower risk nature, and especially in today’s rocky market. The company’s stock has a beta of just
0.44 while it pays out a robust 3% dividend yield on an annual basis, two key factors that investors need to pay attention to right now.
Other Factors
Beyond its lower risk and more stable nature, investors should also to recent earnings estimates which are pretty favorable for SRE. The current quarter
estimate has been on the rise, by about 2.3%, in the past sixty days, while we have seen a similar move in the next year time frame too.
Plus, more recent estimates have been more bullish, as the most recent earnings consensus for both the current quarter and current year is higher than the
full 90 day consensus. This suggests that analysts are really starting to like what they see from this company and are adjusting their predictions as a
result.
But who can blame them given SRE’s stellar record when it comes to earnings season? The company didn’t miss in its last four reports, while it is posting
an average beat of nearly 16% in the last four quarters too.
No wonder SRE has earned itself a Zacks Rank #1 (Strong Buy) meaning we are looking for some relative outperformance from this company as we head into
earnings season.
Bottom Line
The market is pretty rough right now, but there are still plenty of great options out there. One route to take would be to look at top ranked industries
that are a bit safer, such as utilities. The natural gas utility segment is ranked in the top quarter right now and isn’t exactly known for its volatility
either.
And while there are plenty of great options in this space, SRE stands out thanks to its low beta, nice yield, and rising earnings estimates. So if you are
looking to survive this earnings season make sure to take a closer look at Sempra Energy for your portfolio now.
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