Deutsche cautiously optimistic on utilities, sees selective opportunities

|By:, SA News Editor

"The principle risk [for utilities is] 10-year yields taking another run at 3%," Deutsche's Jonathan Arnold says, in a cautiously upbeat note on the sector.

Arnold notes that "regulated utility total return propositions of 7-8%" look good in risk-adjusted terms when compared with "expected market returns in the ~10% range."

Upgraded: Duke Energy (DUK +0.4%), Portland General Electric (POR +1.5%), and PSEG (PEG +0.6%).

Other Buy-rated names at Deutsche: CMS, ETR, CPN

ETFs - IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT

See also: Goldman warms to utilities