Duke Energy Corp (DUK), Dominion Resources, Inc. (D): Effects of Recovery Highlight These Utility Goldmines

As evidenced by the graph below, I anticipate that Duke Energy Corp (NYSE:DUK) will not drop below its 1 year support level of $60. Buying long and even shorting are both reasonable moves.

Dominion Resources, Inc. (NYSE:D) and NextEra Energy, Inc. (NYSE:NEE) will also benefit from the recent decline. PJM Interconnection’s annual report sheds light into electricity pricing and supply increasing within particular markets. The negative effects of the PJM pricing models are expected to hamper the Northern utility market. However, due to their regions of operations, Dominion Resources, Inc. (NYSE:D) and NextEra should not be affected.

Like other utilities, both firms also boast low betas and high dividend yields. For context, the S&P 500 only has a yield of about 2.2%. NextEra and Dominion Resources, Inc. (NYSE:D) are also poised for further growth. NextEra’s forward P/E ratio is nearly 15 and Dominion’s is about 16. Unlike Southern and Duke Energy Corp (NYSE:DUK), both firms are still above their 2013 lows. Therefore, they could still decline. Shorting and then hedging may be your best move.

What Warren would do

Even if the Fed trims its bond-buying program and bonds become more competitive, I anticipate that the Utilities Select Sector ETF will increase along with the utility sector. But, in the meantime, utility stocks will provide you with a hefty dividend and future growth. Just be sure to thank those who sold their shares to move the market. Mr. Buffett would.

Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources and Southern Company.

The article Effects of Recovery Highlight These Utility Goldmines originally appeared on Fool.com.

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