5/9/2014 10:15 PM ET
Utility stock tops 10 picks to watch
Pepco Holdings, an electric power company serving the Washington, D.C., area, tops StockScouter's latest list of 10 recommended stocks.
Compiled from StockScouter ratings by Verus Analytics
Utility stocks – known for their generous yields and glacial-paced growth -- lagged the S&P 500 ($INX) considerably in 2013, as investors embraced risk in a roaring bull market and, at the same time, dividend stocks fell out of favor as interest rates showed signs of rising.
But 2014 has been a different story. A volatile market, geopolitical fears and corrections in many highly-valued growth names have led more investors back into the relative safety of utility and energy stocks.
While the S&P 500 has fought to stay positive this year, adding just 1.4 percent to date, the Utility Select Sector SPRD (XLU) ETF has gained 11.9 percent. The Energy Select Sector SPDR (XLE) has gained 5.7 percent.
Leading StockScouter’s latest list of 10 stocks to watch is a Washington, D.C., area electric and natural gas utility, Pepco Holdings (POM). Pepco shares get a '10' from the StockScouter rating system on MSN Money, the highest score possible. Based on StockScouter's analysis, shares of POM are expected to significantly outperform the market over the next six months with less than average risk.
- MSN Money: 5 high-yielding utility stocks
Energy companies have been cropping up regularly in StockScouter’s picks of late, and this week is no different, with Cabot Oil & Gas (COG), ConocoPhillips (COP) and Chevron (CVX) all ranking in the top 10.
Finally, it’s also worth noting that telecommunications giants Verizon (VZ) and AT&T (T), which pay utility-caliber dividends, have appeared on this list nearly every week since topping StockScouter’s recommendations back on Feb. 21. In that time, AT&T shares have risen 9.4 percent, but Verizon shares have stayed relatively flat.
Read the full Scouter report on Pepco Holdings here.
StockScouter Top 10 for May 9
Pepco Holdings (POM)
Cabot Oil & Gas (COG)
|Oil and gas||0.2%||22.0||10|
Delta Airlines (DAL)
Oil and gas
Oil and gas
21st Century Fox (FOXA)
Dow Chemical (DOW)
Freeport McMoRan (FCX)
Copper and gold miner
StockScouter beats the market
We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tools you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,026 percent through April 30, 2014.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
Performance through April 30, 2014
Full 50 position portfolio
Top 10 portfolio
Inception: August 2001
VIDEO ON MSN MONEY
Pepco cannot be trusted as an investment due to it's bad management and poor decisions made over the years. Be cautious unless you are sure that things have changed.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
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