From Credit Suisse this morning Utilities stocks to underperform as bond yields rise: Credit Suisse
A daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Credit Suisse analyst Andrew Kuske notes that rising interest rates are not good for investors in Canadian utilities stocks,
“Over a longer timeframe, assuming no meaningful regulatory changes, rising interest rates typically translate into stronger regulated earnings growth – albeit a generally constant spread on the risk-free rates (with some exceptions). Yet, the more important factor near term is the reality of rising rates impacting funds flow away from the core regulated Utilities sector and moving towards more cyclical assets. In the context of the current environment, funds flow does not look to favour part of the Canadian regulated utility sector … we continue to favour overall exposure to the renewables sector as outlined earlier this week in Revisiting the Renewable Reality – Upgrade Boralex to Outperform from Neutral. On balance, our ratings amongst the regulated utilities are skewed to Neutral with the exceptions of two unique hybrids: AltaGas Ltd. (ALA) and ATCO Ltd. (ACO) – one skewed by energy infrastructure and one by a holdco structure, respectively”
Just to say ''We have the good one ''