You know which group acts the most insanely here? How about the utilities. Take Consolidated Edison (ED) . Here's a utility that depends on growth from people switching from oil to gas. And it depends on population growth.
But with oil down and population growth suspect in the New York area, given the state and local taxes issue, you have to wonder how this one could be at its 52-week-high. It's certainly not because of its now-modest yield of 3%. Not a lot of sellers, even after rallying 21%.
There was a time when people were worried about the quality of AEP's returns. It had some difficult rate cases that made owning it more challenging than most. It also had hurricane damage that could hurt earnings. Yet, the stock's up 22%.
I know that NRG Energy (NRG) has issues, and I fully expected it to bounce back somewhat, with a change in management. But 137%? What is it, a biotech? What's happening?
A couple of theories. First, if you want income with growth, you want these stocks. They have greater income and less risk than most of the bond market equivalent stocks like the food group, and are nowhere near as dangerous as owning a master limited partnership. I know I have suffered mightily owning those stocks, and I still don't see a bottom in sight, even as there are plenty of theses to make them worth owning, including the need to transport oil from landlocked regions to the markets.
But how about this? What happens if the strength is because they have the potential for real growth if we get electric cars? Theoretically, that demand could fall right to the bottom line. It's not in the numbers, for certain, and yet it makes a ton of common sense. The new business could be a total needle-mover, and sooner than people think. Take a look at a large garage, and you will see what I mean: charger after charger. I am not alone; my writing friend Matt Horween pointed this electric car issue out to me. I think it's the real deal.
Now again, it may just be a matter of necessity with interest rates where they are. That said, though, I mean is 3% really enough to protect a 20% gain? That said, do you sell them? I really dislike buying a utility that only yields 3%.
That said, these have been tremendous buys. They have been unsung heroes of the bull market. And they don't seem to know when to quit.