Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Beating the Stock Market with Utilities

Monday, December 10th, 2012
By for Profit Confidential

Beating the Stock MarketNo business is recession-proof, but there are lots that are recession-resistant. In terms of your stock market portfolio strategy, it certainly pays to have a few names that fit into the recession-resistant category. The U.S. economy typically experiences a recession about once every five or six years.

You might consider a utility company or possibly even a brewery as being a recession-resistant business. The Southern Company (NYSE/SO) stands out in the utility sector as having a great long-term track record on the stock market. For sure, the company isn’t growing as fast as an Internet start-up, but what it does offer is consistency of revenue and earnings growth—even during recessions. The company’s stock market chart appears below:

SO southern co stock market chart

Chart courtesy of www.StockCharts.com

A company doesn’t have to be large to be a recession-resistant business. Certainly a large-cap company has more economies of scale to weather the storm, but what’s more important is the kind of business a company is in and how it is managed.

AZZ Incorporated (NYSE/AZZ) is a small-cap company that manufactures and sells electrical components to utility companies. (See “The Debt Demon Lurks—It’s Still Out There Waiting to Strike.”) On the stock market, the company’s share price has been a solid winner for five years straight. It recently split its stock two-for-one and its shares took off. AZZ’s stock market chart is below:

  • Double your money every year for 24 years running?

    Since 1989, we've made 912 option picks, with an average annualized profit of 166.17% per recommendation.

    All from Lombardi's best option picks!

    Click here to learn more.

AZZ Azz, Inc stock market chart

Chart courtesy of www.StockCharts.com

A lot of people expect the U.S. economy to experience another technical recession next year or in 2014. It’s a good assumption to plan for because of the country’s track record. From the investor’s point of view, part of the attractiveness of a recession-resistant business is dividend income. I think dividends will be crucial over the next couple of years, because I don’t expect much in the way of capital gains.

Over the last 10 years, the Utilities Select Sector SPDR (NYSEArca/XLU), an exchange-traded fund (ETF) that holds most of the biggest utility companies in the U.S., has been far more volatile than Southern Company. A lot of stock market investors might be put off by the utilities sector as not offering enough growth. Pull up a long-term chart on Consolidated Edison, Inc. (NYSE/ED) and factor in dividends, and minds will change quickly.

VN:F [1.9.22_1171]
Rating: 9.0/10 (1 vote cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)
Beating the Stock Market with Utilities, 9.0 out of 10 based on 1 rating

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.