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Executive Summary

Utility Stocks: New Life from M&A

By Roger S. Conrad on Oct. 12, 2020

A “rumored” merger offer from NextEra Energy (NYSE: NEE) did more than ignite a rally in Duke Energy (NYSE: DUK) shares this month. It appears to have breathed new life into the whole utility sector, which with few exceptions has consistently lagged the S&P 500 this year.

A comeback has been overdue for some time. US utilities demonstrated their business resilience in troubled 2020. And they’re poised to accelerate growth by cashing in as the world transitions to suddenly cheap renewable energy and adopts ultra-fast 5-G communications.

Almost every stock related to wind and solar has been off to the races this fall. That’s no doubt because some view renewable energy as a smart bet if Democrats win next month’s elections. The beauty is infrastructure spending will be a priority no matter who’s in the White House next year. And utilities will capitalize, even while ramping up investment in renewables with state support.

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