UBS most preferred European Utilities are E.on /EDF/ Enel/ Engie / Fortum / Gas Natural.
+ & – to invest in the sector :
+ Sector’s return to positive earnings growth (5-7%) + favorable earnings revision + Earnings visibility.
+ Relative valuation vs others sectors.
+ High Dividends in Low Bond Yields environment.
+ Global Energy transition should be beneficial.
– Politics & new regulations .
– Risk = Long rates evolution .
+ « Defensivity « of sector in streched market environment.
Enel , Engie and E.on are the cheapest based on P/E metric.
Engie on P/BV point of view.
Gas Natural based on Dividend.
10Y Treasuries approaching 2.60% , 10Y JGBs 0.09% highest since July .. markets nervous … Trigger for Stocks correction ???
• Stifel sees a 5% SP500 correction in Q1 for SP500.
• SP500 seen at roughly current levels by EOY = Active investing environment
• Slide 2 for long term forecast !!! (Note that Stifel forecast has been quite correct in the last 6-7 years in this bull market).
• Slides 6 on long rates and SP500.
• US 10 Yields seen at 2.96% eoy
Link to the Stifel Macro & Portfolio Strategy : Stifel 050118