By Richard Suttmeier  

Investors had been flocking into utility stocks, for the dividend yield, since the stock market lows of March 2009. 

I became concerned about the sustainability of the uptrend for the Dow Jones Utilities since July 30, when I wrote Consider Taking Profits on Utility Stocks .

On July 30, I profiled the Utilities Select Sector SPDR (XLU), which then had a dividend yield of 3.6% versus a yield of 1.553% on the U.S. Treasury 10-year note. Today the dividend yield on XLU is 3.49%, and despite the QE3 initiatives announced by the Federal Reserve on Sept.12, the yield on the U.S. Treasury 10-year note is up to 1.691% Wednesday morning.

Third-quarter earnings reports have not been kind to utilities stocks as the pattern for the majority of power companies has been to miss on both earnings per share and on the revenue line.

On July 30, ValuEngine showed that the utilities sector was the most overvalued of the 16 sectors by 12.9%. Today the utilities sector is 7.2% overvalued and six of the 16 sectors are more overvalued than utilities. 

Below I profile eight utility stocks and all are down since July 30 and are below their 200-day simple moving averages.

This week we have seen the Dow Jones Utility Average (UTIL) plunge below its 200-day simple moving average (SMA) at $469, as shown on the chart below. Daily momentum has become oversold, but the weekly chart profile is negative. Dow utilities are down 0.5% year to date diverging from the 8.4% year to date gain for Dow industrials. My proprietary analytics does not show a nearby value level and my weekly, monthly and quarterly risky levels are $477.82, $498.29 and $499.85.

Chart Courtesy of Thomson/Reuters

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: The price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: is the price at which to enter a GTC limit order to sell on strength.

Dominion Resources (D) ($50.97 vs. $54.97 on July 30): Still has a "buy" rating according to ValuEngine with the stock below its 200-day SMA at $52.26. My semiannual value level is $41.17 with a weekly pivot at $52.04 and monthly risky level at $55.03.

Duke Energy (DUK) ($64.08 vs. $67.46 on July 30): Still has a "buy" rating and is below its 200-day SMA at $65.08. My quarterly value level lags at $42.39 with a weekly pivot at $64.77 and monthly risky level at $71.57.

Consolidated Edison (ED) ($57.76 vs. $64.90 on July 30): Still has a "buy" rating with the stock below its 200-day SMA at $60.17. My annual value level is $55.89 with a weekly pivot at $58.86 and semiannual risky level at $61.82.

Entergy (ETR) ($66.90 vs. $72.59 on July 30): Still has a "buy" rating with the stock below its 200-day SMA at $68.07. My quarterly value level is $61.10 with a monthly risky level at $71.23.

Exelon (EXC) ($31.95 vs. $39.37 on July 30): Has a "buy" rating versus a "hold" rating back on July 30. The stock is below its 200-day SMA at $37.73. My semiannual value level lags at $16.16 with a weekly pivot at $34.29 and monthly risky levels at $35.50.

FirstEnergy (FE) ($43.20 vs. $50.45 on July 30): Still has a "buy" rating according to ValuEngine and is below its 200-day SMA at $45.82. My semiannual value level lags at $22.33 with my weekly risky level at $46.18.

PG&E (PCG) ($41.91 vs. $46.11 on July 30): Still has a "buy" rating according to ValuEngine and is below its 200-day SMA at $43.44. I do not show a value level with a semiannual pivot at $41.12 and semiannual risky level at $45.76.

Southern Company (SO) ($44.14 vs. $48.42 on July 30): Still has a "hold" rating according to ValuEngine with the stock below its 200-day SMA at $45.78. My semiannual value level is $43.36 with an annual pivot at $44.66 and annual risky level at $46.37.

At the time of publication the author held no positions in any of the stocks mentioned.

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