Utility stocks may be poised for a breakout as investors expect further rate cuts from the Fed. That and a global grab for power could put these companies back in the sweet spot.
Guy Adami thinks the utilities will be in play so long as the demand for power continues to surge. While a fan of PG&E, Guy noted that the stock has been a dog lately. He would avoid it until he gets a better picture after its earnings call Friday, although he did say it’s becoming cheap.
Guy’s best-of-breed power play is Public Service Enterprise Group, which has all its fundamentals in order. Taking the trade one step further, Guy said the utilities are also a play on the “buildout trade,” for which he recommended exposure to engineering companies through stocks like Fluor (FLR), Jacobs Engineering (JEC) and Shaw Group (SGR).
For those who don’t want the risk inherent in buying one utility stock, Tim Seymour suggested the utility ETF , which gives exposure to the whole sector. Between the infrastructure and power grid problems in this country and a worldwide power shortage, Tim said betting on the utilities is a solid move.
Power stocks are always some of the best places to go when the Fed slashes rates, according to Karen Finerman.
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Trader disclosure: On Feb.21, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (YHOO); Seymour Owns (AAPL), (CSCO), (F), (MSFT), (S), (TSO), (SBUX), Seygem Asset Management Owns (CCJ), (TIE), (GAF) Seygem Asset Management Is Short (EEM); Finerman’s Firm is Short (IYR), (IJR), (SPY), (MDY), (IWM), (LEH) and Owns (LEH) Puts; Finerman’s Firm Owns (VLO), (TSO), (MSFT), (KSS), (JCP), (AAPL), (TSO), (VLO), (YHOO), (WMT), (MO), (AEO); Finerman Owns (GS); Dennis Gartman Owns (CIM), (COIN), (PRB), (SID), (PAL), (UNG), Gold, (UUP), (SWC), (HOV), (GWR), (GMO); Gartman is Short (SDS), (COH), (HOG), (RTH), (MMM), (GM), (DCR), (AAPL), (DRYS), CIBC; Gartman Index Owns Gold, the EUR, the Canadian Dollar, Sugar