Cramer’s utility with bigger gains than Netflix & Goldman

(Click for video linked to a searchable transcript of this Mad Money segment)

If you lump all utility stocks together, Jim Cramer says you're making a big mistake.

There's a utility that's generating bigger year to date gains than Netflix or Goldman Sachs. Yet, it doesn't get nearly the same attention.

The utility is Entergy and, year to date, shares have surged about 24 percent. (Netflix is up 16 percent year to date, while Goldman Sachs is down over the same period.)

Tomasz Wyszoaminski | iStock | Getty Images

"Part of the price action is due to the decline in interest rates," Cramer said. "Income seeking investors are flocking to dividend stocks, such as Entergy, especially those with high yields."

However, the XLU, the ETF that tracks the utility sector, has only gained 14 percent year to date. Entergy is outperforming the group.

Part of that has to do with the business model.

"In the South, Entergy is a straight up generation, transmission and distribution utility with 2.8 million customers in Arkansas, Louisiana, Mississippi and Texas," Cramer said.

"However, the company also does business in the North, where it's a pure power generation business with six nuclear plants that sell electricity to wholesale customers, namely, other utilities on the distribution side. Power prices have been rising in the North, ultimately boosting the company's sales and earnings."

Looking forward, Cramer sees every reason to believe shares will continue to remain strong.

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"Just yesterday Entergy had a bullish analyst day where they talked about expansion opportunities and how their numbers are coming in way ahead of previous forecasts," Cramer said.

Part of Entergy's strength stems from something Cramer often talks about on "Mad Money," the energy revolution underway in our nation.

As a result, "there's a manufacturing renaissance that's occurring in the Gulf South," explained Leo Denault, the chairman and CEO of Entergy on "Mad Money." "These are our customers. Therefore, in an era when so much utility growth is flat, we have the ability to grow our load substantially because of this industrial renaissance."

All told, Cramer is impressed. "I think this is Entergy's time. It's a utility with steady growth and there aren't many of those," said Cramer.

It appears Cramer isn't the only one who's looking for more upside. BMO Capital upgraded the stock on Friday from 'market perform' to 'outperform' with an $89 price target.

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