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ETF Screen: Getting a Charge From Utilities

No matter if you are a professional money manager on Wall Street or a talking baby churning your discount brokerage account, consistent idea generation is a cornerstone of successful investing.

To paraphrase a quote attributed to notorious bank robber, Willie Sutton, ETFStocks.com believes that knowing “where the money is” can help identify winners. Our ETF heat-map is a terrific resource for finding hot sectors and hot stocks.

With just a few mouse clicks, savvy and novice investors can easily see which styles, market-caps or sectors/industries are attracting buyers, and the equities driving the gains.

For example, On Tuesday, ETF Stocks noticed four Utility ETFs in the top 10 of the performance leaderboard. Whether it is up or down, we pay particular attention to clusters of similar exchange traded funds doing the same thing at the same time. Agreement, confirmation or whatever you want to call it, typically means institutions are moving in – knowing where the money is.

Conservative folks who want a diversified portfolio might pick and stick with one of the Utility ETFs:

SPDR Select Sector Fund – Utilities (XLU)
iShares Dow Jones U.S. Utilities (IDU)
Vanguard Utilities ETF (VPU)
Rydex S&P Equal Weight Utilities (RYU)

If you are the sort that prefers owning individual stocks, the next step is to click on the ETF. It will display the fund’s constituents based on today’s performance, one of sixteen price and valuation filters.

What we like to do is compare the holdings of our targeted ETFs, seeking companies they have in common – knowing where the money is.

With just a handful of mouse clicks, ETF Stocks generated 10 potential ideas that are in at least three of the Utility ETFs:

DTE Energy Company (DTE)
Pinnacle West Capital Corporation (PNW)
NiSource Inc (NI)
Sempra Energy (SRE)
Public Service Enterprise Group (PEG)
Progress Energy, Inc. (PGN)
SCANA Corporation (SCG)
Duke Energy Corporation (DUK)
AGL Resources, Inc. (GAS)

From a purely technical analysis approach, many of these stocks are positioned to move higher. For your convenience, we bolded our favorite charts in the list above.

In a close call, our top technical choice is Duke Energy Corporation (DUK). The electricity provider that serves parts of the Carolinas, Ohio, Indiana and Kentucky, has seen its shares consolidate after setting new highs as 2011 came to a close.

DUK’s current price and volume characteristics indicate that the stock could be ready to breakout of the box and resume its march higher. Duke’s stock chart shows a bullish MACD crossover, and its short-term moving-averages are beginning to shift upwards.

If the price breaks $21.50, shares should challenge the 52-week high of $22.12. As momentum investors know, stocks that set new highs usually reach new, higher highs.

ETF Stocks thinks Duke Energy offers investors the potential for a 15% total return; 10% from capital appreciation and 4.70% from its dividend. As always, we suggest having a plan to limit losses in the event our timing is off. A stop loss order around $21.50 is about as low as we would be willing to go.


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