3 Utilities Stocks for Active Investors
Utilities stocks are often among the most overlooked in the stock market. But with their typically sizable dividends and history of relatively low volatility, utilities stocks may be worth a look at profit-taking in the sector has many major utilities stocks trading at a discount.
Shares of Southern Company (NYSE: SO) have pulled back for two out of the last three days, selling off by more than 1% on Friday. The correction in SO takes the stock to near, two-week lows, and returns Southern Company to a trading range that extends back to early February.
With a short-term positive edge of less than half a percent, and neutral, 6 out of 10, ratings, Southern Company may have further to fall before traders are sufficiently convinced to re-enter the market on the buy side. The last time SO traded technically oversold was in early January when a five-day slide led to a rally that took Southern Company to new, two-week highs just seven days later.
Pulling back from new, 52-week highs reached at the beginning of the week, Nisource (NYSE: NI) has come under aggressive selling, closing lower for the last four days in a row. Newly oversold above the 200-day moving average, shares of Nisource earned a one-point ratings upgrade early in trading on Friday, and has a short-term, positive edge of just under half a percent.
The last multi-day pullback in Nisource led to exceptional gains in a very short period of time. Selling off for five days in a row in the first half of February and finishing in oversold territory, shares of Nisource closed higher by 1% the first day afterward and bolted higher by another 2% on the second day.
Down three in a row and breaking down below a trading range that extends back to mid-February (and arguably to early January, as well), shares of Consolidated Edison Inc. (NYSE: ED) are now trading at their lowest level since the fall of 2011. The sell-off in the stock has earned Con Ed a positive edge in the short-term of more than a third of a percent, and a neutral rating of 6 out of 10.
Consolidated Edison was last trading in oversold territory a month ago. Then, a retreat that featured two oversold finishes, and three lower closes out of four, was followed by a rally that returned ED to near, new two-week highs after a gain of more than 2%.
Traders who want to take advantage of weakness in the sector, but also want to steer clear of single stock risk, may want to consider the short-term oversold conditions in the Utilities Select Sector SPDRS ETF (NYSE: XLU). Shares of XLU have closed lower for three days in a row, all three in technically oversold territory, and have a positive edge in the short-term of three-quarters of a percent.
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David Penn is Editor in Chief of TradingMarkets.com