No One’s Ignoring Energy Prices, So Why Is Everyone Ignoring Utilities Stocks?

Stéphane Renevier

5 months ago4:20 mins

No One’s Ignoring Energy Prices, So Why Is Everyone Ignoring Utilities Stocks?

Utilities stocks are in a weird place right now: they’ve barely managed to outperform the broader market since the start of the year, even as the prices of the electricity, gas, and other services they offer have skyrocketed. There are good reasons for that, sure, but you shouldn’t necessarily avoid them just because everyone else is.

Why haven’t utilities done better?

Utilities companies’ revenue might’ve increased, but so have the costs of the raw materials they need. Those extra expenses mean higher production costs and lower margins. And since utilities are heavily regulated, they can’t fully pass on those higher costs to customers.

In fact, even their profits tend to be regulated, with governments taxing any gains over an “allowed profit” in order to subsidize customers. And gi

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