The case for utilities stocks and ETFs is not entirely broken. Analysts are more sanguine on regulated utilities and the sector’s large-caps are becoming more reasonable on valuation.
“While the sector still looks expensive relative to its long-term average, valuations have fallen. Given utilities’ underperformance, the sector now trades at a discount to the broader market. Specifically, valuations for the utilities sector have contracted by around 10% since last April, and large-cap utilities companies now trade at a 10% discount to the broader market,” said BlackRock Chief Investment Strategist Russ Koesterich in a note published earlier this week.
iShares U.S. Utilities ETF
