SWOT Strengths > SWOT Weaknesses?
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SWOT Opportunities > SWOT Threats? |
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US ETF Funds
First Trust Utilities ETF (FXU)
Merrill Lynch Utilities ETF (UTH)
iShares Utilities ETF (IDU)
PowerShares Utilities (PUI)
ProShares Utilities (UPW)
UltraShort Utilities (SDP)
S&P Equal Weight Utilities ETF (RYU)
SPDR Utilities (XLU)
Vanguard Utilities ETF (VPU)
Non - US ETF Funds
Emerging Utilities (EUT)
iShares Global Utilities ETF (JXI)
S&P Intl Utilities ETF (IPU)
WisdomTree Intl Utilities (DBU)
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Index of Utility Companies
Research Report
Utility Industry Analysis ► (edit / improve) Description: The utility industry includes companies whose sales come from the administration of public services such as water and power. Valuation Analysis: Based on WikiWealth's Wall Street analysis, this industry is a Hold, but with positive potential. The Main Street analysis says a Buy, with SWOT strengths great than weaknesses and SWOT opportunities greater than threats. Trade Analysis: Denmark is a major area of utility innovation, especially for the generation of power. Main utility commodities include coal, natural gas, crude oil, and uranium. Profit Conclusion: The utility industry tends to be less sensitive to economic cycles, because public services are essential to industrial and residential consumers. Look to buy undervalued utility investments and sell overvalued utility investments during any part of the business cycle.
Investment Impacts (help)
Denmark Country Analysis ► (edit / improve) Denmark (DKK) has a highly productive, capitalist economy and above average European living standards. Currency Analysis: Denmark is very overvalued according to the purchase price parity analysis. Investment flows, interest rate parity and inflation rate parity also point to an overvalued currency. Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom, diversity, and government transparency. Trade Analysis: Finland, Sweden, Norway, the UK, and the Netherlands are the top trading partners. Commodity Analysis: Denmark is a service-based economy that relies little on commodity exports. SWOT Analysis: A flexible labor market is the main SWOT strength for Denmark and the Eco-Grid project is the main opportunity. Profit Conclusion: An overvalued currency, low investment flow potential, but favorable business environment leads to a neutral outlook for Denmark’s investments.
Commodity Investment Impact
Coal Commodity Analysis ► (edit / improve) Coal is the largest source of fuel used to produce electricity in the world. Coal is also one of the largest sources of carbon dioxide emissions. Commodity Analysis: Coal is rated a Buy. Coal demanders have a high potential to grow, while coal suppliers have low potential in increase. Investor Survey: Coal’s long term growth potential is moderately favorable due to high scores on sensitivity to price changes and low sources in short supply and substitute products. SWOT Analysis: Strength: Coal is the largest source of energy worldwide; Weakness: coal produces considerable pollution. Opportunity to grow: coal’s widespread use could aid growth as the world economy grows; Threats to growth: alternative forms of clean energy may compete against coal. Profit Conclusion: The commodity analysis buy rating indicates that coal should increase in price over the short term, whereas a moderately favorable investor survey means coal may not increase in price over the long term.
- Coal is a dirty fuel. Unless technology can limit the pollution from coal, it might decline in use over the long term.
Natural Gas Commodity Analysis ► (edit / improve) Natural gas is a significant fuel source used to produce electricity in the world. It primarily consists of methane gas. Commodity Analysis: Natural is rated a hold. Natural gas demanders have a high potential to increase in value, while natural gas suppliers also have high potential in increase in value. Investor Survey: Natural gas’s long term growth potential is favorable due to high scores on difficulty to expand in the short term and sensitivity to price changes. SWOT Analysis: Strength: Natural gas is a cheap fuel source, especially in the US; Weakness: natural gas produces considerable pollution. Opportunity to grow: natural gas could produce hydrogen fuel, which is a substitute for gas in cars; Threats to growth: alternative forms of clean energy may compete with natural gas. Profit Conclusion: The commodity analysis hold rating indicates that natural gas should stay the same price over the short term, whereas a moderately favorable investor survey means natural gas should increase in price over the long term.
- Natural gas produces less pollution than coal and natural gas power planets can power up much quicker.
Crude Oil Commodity Analysis ► (edit / improve) Crude oil is used to produce fuel oil and gasoline. Gasoline is the largest supplier of fuel for internal combustion engines. Commodity Analysis: Crude oil is rated a Sell. Crude oil demanders have a moderate potential to increase in value and crude oil suppliers have a very high potential to increase in value. Investor Survey: Crude oil’s long term growth potential is very favorable due to high scores on sensitivity to price changes, demand not sensitive to price changes, and the SWOT analysis. SWOT Analysis: Strength: Limited natural resource / supply; Weakness: Emits carbon dioxide. Opportunity to grow: the overall growth of vehicles will increase demand for crude oil; Threats to growth: environmental concerns could slow growth potential in the near term. Profit Conclusion: The commodity analysis sell rating indicates that crude oil prices should decrease over the short term, whereas a very favorable investor survey means crude oil prices increase over the long term.
- Crude oil is volatile in price and comes from unstable regions of the world.
Uranium Commodity Analysis ► (edit / improve) Uranium has two main uses: 1. as a military weapon used to penetrator armor; 2. as a power source used in nuclear plants. Commodity Analysis: Uranium is rated a Buy. Uranium suppliers have low potential to increase in value; therefore, supply could decrease over time. Investor Survey: Uranium’s long term growth potential is very favorable due to high scores on sensitivity to price changes and difficulty to expand in the short term. SWOT Analysis: Strength: Uranium is the main fuel for nuclear power plants, which are expected to grow over the long term; Weakness: nuclear waste is a negative effect of using uranium fuel. Profit Conclusion: The commodity analysis buy rating indicates that uranium should increase in price over the short term, while a very favorable investor survey means uranium should increase in price over the long term.
- Uranium does not produce harmful green house gases, but it's use, transportation and waste is dangerous.
Importance of the Industry Analysis? WikiWealth's industry analysis evaluates the major industry characteristics that affect investments within that industry. Company specific factors drive the performance of individual companies, but macro-economic industry factors can affect the performance of entire groups of stocks.
Warren Buffett Quote: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
No matter the quality of your business, industry economics is an important factor in any investment decision.
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WikiWealth.com Industry Description: The utility industry includes companies whose sales come from the administration of public services such as water and power. ... Read more about the utility industry. Also see the Industry Analysis Home Page.
WikiWealth.com Profit Analysis: The best way to profit from utilities stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) before economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, utility stocks tend to underperform the general stock market, because consumers quickly resume spending on items they wanted, but resisted buying during tougher economic times. Utilities are generally items that consumers bought during a recession, but don't increase purchases during economic expansions. Eventually other stock investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to buy utilities stocks, because they are the least risky equity investments in a declining stock market. As investors search for safe (less risky) stock investments, they tend to buy utilities. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. Click for more information: stock research ratings.
WikiWealth.com Industry Analysis: Utilities tend to be less sensitive to economic changes. During economic recessions, consumers tend to decrease discretionary expenses to save money, but they can not decrease utility purchases, because they are needed for everyday living. Spending on utilities generally remains constant, so during economic recessions, investors tend to buy utility stocks, which causes stock prices to increase. During economic recoveries, utilities stock prices generally underperform the general stock market. Investor who bought utilities stocks during the recession, tend to make new investments in faster growing industries. During longer economic expansions, utilities tend to grow at the same rate as the general stock market.
| Utility Industry Statistic |
Stat |
Notes |
| Stock Rating |
Hold |
… |
| Potential (safety margin) |
40% |
High ~ Good for investors |
| WACC Analysis |
6% |
Low ~ Good for investors |
| Comparative Industry Multiples |
Stat |
Notes |
| Revenue EV Multiple |
2.3x |
… |
| EBITDA EV Multiple |
8.5x |
… |
| EBIT EV Multiple |
7.3x |
… |
| Cash Flow EV Multiple |
-5.3x |
Low ~ Bad for investors |
| Book Value EV Multiple |
1.9x |
… |
| Discounted Cash Flow |
Stat |
Notes |
| Revenue Growth |
10% |
… |
| EBITDA Margin |
30% |
High ~ Good for investors |
| EBIT Margin |
20% |
High ~ Good for investors |
| Cash Flow Margin |
5% |
… |
| Taxes Rate |
23% |
… |
| Debt-Equity Ratio |
96% |
High ~ Bad for investors |
| ROIC |
5% |
… |
| Reinvestment Rate |
13% |
Low ~ Good for investors |
| WACC Discount Rate |
Stat |
Notes |
| Risk Free Rate |
4% |
Low ~ Good for Investors |
| Cost of Debt |
7% |
Low ~ Good for Investors |
| Equity Risk Premium |
5% |
… |
| Debt Required Return of Debt |
5% |
Low ~ Good for Investors |
| Required Return of Equity |
7% |
Low ~ Good for Investors |
1 WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.
2 Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.
3 The weighted average cost of capital (WACC) analysis for the industry is a broad representation of the WACC for each individual company. A sub-industry WACC analysis offers both stability and accuracy for each individual company.
SWOT Analysis
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