Your Survival Guy

Preparing your investments and family for when disaster strikes.

Compensation was paid to utilize rankings. Click here to read full disclosure.

Fidelity Investments: Energy and Utility Stocks a Buy?

By

By ttonaorh @ Adobe Stock

You that Your Survival Guy thinks there are more ways to invest in AI than just chip stocks. All those data centers need power and lots of it. Here’s what Fidelity is saying about energy and utility stocks:

Stocks in the energy and utilities sectors sit at the nexus of ever-changing energy costs, surging global power demand, shifting energy production dynamics, and a range of other factors. As markets have heated up to record highs, investors may want to consider that these stocks appear to represent one of the best values in the market today based on earnings multiples.

Will energy power up?

While a 7% year-to-date price gain for energy stocks thus far in 2024 might be considered strong most years, that compares with a 17% gain for the S&P 500 year to date. This follows a 3% decline for energy stocks during 2023. Over the longer term, energy (and utilities) have underperformed the S&P 500, and have far underperformed more cyclical sectors.

Why have energy stocks underperformed recently?

Energy is a competitive, capital-intensive sector that tends to rise and fall with the broader economy. Even though US GDP growth has been robust, lingering potential recession concerns have contributed to the volatility in energy stocks over the past several years. There has also been a clear investor preference for tech and other high-growth sectors. These factors, among others, have helped put a cap on momentum for energy stocks.

But there’s a bright side. Because energy stocks have not run up as much as some other sectors during this bull market, and because the sector’s fundamentals generally remain sound, it is currently one of the most attractively priced. The price-to-earnings (P/E) ratio for the S&P Energy Select Sector Index is low (i.e., more attractive) relative to the current S&P 500 P/E ratio as well as to its own long-term historical P/E ratios. Additionally, dividend yields in the energy sector (as well as the utilities sector) are broadly among the highest across the market.

Action Line: Read more about the power demand from AI and data centers below, and click here to subscribe to my free monthly Survive & Thrive letter.

The following two tabs change content below.
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

Recent Posts from YourSurvivalGuy.com

September RAGE Gauge: Win Friends and Influence People

Well, that was an interesting debate, wasn’t it? Not exactly a seminar on how to win friends and influence people. When I talk with you, you tell me it didn’t sway you one bit. And you feel the same way about the undecided voters—they weren’t compelled either way. When I think of Dale Carnegie’s classic […]

A Word on the Trump/Harris Dystopian Debate

We knew going in that former President Donald Trump would not get a fair shake from ABC, but it felt like we were watching a trial from The Hunger Games without the costumes. Vice President Kamala Harris was treated like the incumbent and heir to the throne by the moderators. The primetime show was borderline […]

The Trump Tax Reforms and Biden/Harris Inflation

Americans miss the days when their wages were rising in real (inflation-adjusted) terms powered by the Trump tax cuts. For the last three years, they’ve been burdened by higher spending from the Biden-Harris administration, with the outcome being more Americans on the government dole for things like healthcare, rather than being able to afford it […]

Businesses Eager to Invest in Sunbelt

America’s sunbelt is attracting businesses eager to invest in the usually low-tax, low-regulatory states. Will Parker reports for The Wall Street Journal: The U.S. is experiencing a manufacturing revival. More property investors are eager to capitalize on it. American and overseas companies have committed nearly half a trillion dollars to build new factories for electric […]

You’re Ignorant, Learn to Know the Answers

When you invest in a passive index, is it passive? The idea behind “passive” is that the stock market is “efficient,” and that there are no real values to be had because of the wisdom of crowds. Tell that to Warren Buffett, who’s made a decent living for decades on investing against the ignorance and […]

“Revitalized” Oracle Reaps an AI Dividend

In The Wall Street Journal, Tom Dotan discusses the revitalization of Oracle, which “missed the tech industry’s move to cloud computing last decade and ended up an also-ran.” Dotan explains that the AI boom has given Oracle another shot, writing: The 47-year-old company that made its name on relational database software has emerged as an […]

Wealthy Young Americans Are Fleeing High Tax States

You know them as Your Survival Guy’s Escape States. These are states like California, Illinois, and New York, where income earners are treated like piggy banks to be withdrawn from in order to fund politicians’ ideological spending ideas. Residents aren’t treated like customers to be served by government, they’re expected to serve government through punitive […]

A Word on Stock Prices and Their Nephew

A word on stock market prices and their nephew past performance. When investors pile into the S&P 500 the way so many do—automatically with their 401(k) contributions—there’s a tremendous amount of money riding on the same stuff. Investors, knowingly or unknowingly, get piled into the same boat, hoping and praying to get to their retirement […]

In Your Retirement Life, This Matters the Most

Remember, it’s not what you invest in but how you invest that matters most. With the mini pullback in stocks, look at how well-balanced portfolios have done. In The Wall Street Journal, Jon Sindreau explains that the last few months have shown (once again) the value of a balanced portfolio of stocks and bonds. He […]

Americans are Bullish on Stocks, Should You Be?

The stock market has minted millionaires this year, reports Gunjan Banjerji in The Wall Street Journal. That’s not bad, but Americans, as Banerji explains, “have rarely been this giddy about the stock market.” Banerji writes: U.S. households’ stock allocations have steadily inched up this year, according to JPMorgan estimates, and recently accounted for around 42% […]

It’s Time to Evaluate Your Portfolio

When investors are feeling good about the stock market, like they are now, it’s time to evaluate your portfolio. As Warren Buffett said you want “to be fearful when others are greedy and to be greedy only when others are fearful.” Remember the big pullbacks in stocks this century and think how you would handle […]

Congratulations Babson College

Congratulations to Babson College, coming in at #2 on the 2025 list of Best College in America from The Wall Street Journal. That’s a big jump from last year’s already impressive rank of #10. Here’s what Tom Corrigan and Kevin McAllister have to say about Babson in the WSJ: At second-ranked Babson College, the emphasis […]

Biden Admits to False Advertising

Joe Biden has finally admitted to what everyone who was paying attention already knew. The so-called “Inflation Reduction Act” had nothing to do with inflation and everything to do with making Biden’s “Green New Deal” palatable to Americans looking for relief at the gas pump and grocery stores. While Americans suffered to buy the essentials, […]

Your Survival Guy’s Update on the Kittens

“No one gets out alive,” is a thought running through my head as I think about integrating our kittens into life as we know it. For a little background, we brought home two Bengal kittens—Phantom and Fred—a couple weeks ago. Together they make a whole lot of chaos. But did I mention our daughter’s cat, […]

What I Do When I Hear “Digital Advisor”

When Your Survival Guy hears “digital advisor,” I run. Vanguard is “allowing” smaller accounts into “Digital Advisor” services. Alex Ortolani reports at Plan Adviser: Vanguard announced Wednesday it will lower the asset minimum for its automatic advisory services to expand access to a broader swath of clients. The asset management giant has lowered the minimum […]