Today I posted my two-hundred-and-seventh YouTube video.
This week’s Trend of the Week: Time for Utilities? I think it is. Looking at Utilities Select Sector SPDR Fund (XLU), you can see the recent dip in utilities, which means yields are up. On top of that, I think utilities are a good long-term investment opportunity. Utilities make their returns by spending capital and putting those projects into their rate base so that regulators allow utilities to hike prices to earn a market return on that invested capital. Utility National Grid recently came out with a study predicting that by 2030, electrifying a typical highway gas station to handle just passenger EVs, will require the same amount of power that is needed for a pro sports stadium-well above the electrical supply they’re currently getting. In 2035 the demand growth looks even more dramatic after the study adds in demand from larger electric trucks. Then each highway gas station/truck stop will need as much electricity as a small town. And this demand won’t be averaged over the course of a day. There will be a need for spikes of power, as cars and trucks quickly recharge their batteries. Currently, we’re building electric cars faster than we are building the necessary infrastructure to charge them. Because of that, we’re going to see a lot of capital put into new infrastructure by utility companies. Which means a larger rate base and higher revenue for utilities.
Here’s the link:
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