imaginima
As most of you know, the 2022 bear market has investors scurrying away from growth toward more defensive oriented "value" sectors that can deliver some decent income. That being the case, you should not be surprised that the
XLU: Suddenly, Utilities Rock
Summary
- The XLU Utilities Select Sector SPDR ETF has outperformed the S&P 500 by more than 20%+ over the past year.
- However, I think XLU has further to run due to a number of bullish catalysts.
- These include two demand related catalysts: global warming & greater EV adoption, as well as the Biden administration's ability to pass clean-energy and infrastructure legislation.
- And two fundamental catalysts: decent income (2.64%) and - with a price-to-book ratio of only 2.5x - the utility sector still trades at a big discount to the overall S&P 500 (P/B=3.9x).
Michael Fitzsimmons is a retired electronics engineer and avid investor. He advises investors to construct a well-diversified portfolio built on a core foundation of a high-quality low-cost S&P500 fund. For investors who can tolerate short-term risks, he advises an over-weight position in the technology sector, which he believes is still in the early stages of a long-term secular bull-market. For dividend income, and as a 4th generation oil & gas man, Fitzsimmons suggests investors consider a position in large O&G companies that provide strong dividend income and dividend growth. Fitzsimmons' articles on portfolio management recommend a top-down capital allocation approach that is aligned with each individual investor's personal situation (i.e. age, retired/working, risk tolerance, income, net worth, goals, etc) and might include allocations into investment categories such as the S&P500, technology, dividend income, sector ETFs, growth, speculative growth, gold, and cash.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of XLP, ED either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
I am an electronics engineer, not a CFA. The information and data presented in this article were obtained from company documents and/or sources believed to be reliable, but have not been independently verified. Therefore, the author cannot guarantee their accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for the investment decisions you make.
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