Utilities

Report by Hedgeye

The proposed Dominion Energy tie-up is less a sign of strength than evidence that NEE's premium growth engines at FPL and NEER are under increasing pressure. While Dominion would add regulated growth, Fernando Valle sees most of the EPS accretion coming from NEE using expensive equity to buy a lower-multiple utility, rather than superior underlying economics. Dominion's Virginia utility earns a lower allowed ROE than FPL and adds 10-12% less value per $1bn invested. At the same time, renewable and storage returns are thin, capex intensity is rising, regulatory scrutiny is tightening, and several onshore wind and solar projects are underwater ahead of a tax-credit cliff. Fernando thinks investors are underestimating the risk that NEE converges towards Dominion's valuation multiple, rather than the other way around. He also sees NEE's premium as increasingly dependent on financial engineering, including substantial off-balance-sheet debt, making the multiple harder to defend.

Report by View from the Peak

US equities remain the world’s most important market, but passive benchmarks are distorted by AI concentration risk. Durable alpha lies in structural themes beyond AI. Power infrastructure (Constellation, Duke, NextEra) will benefit from grid bottlenecks as data centres drive demand. Re-industrialisation (Caterpillar, Honeywell, Rockwell) reflects reshoring and automation. The energy transition (Dominion, Enphase, ExxonMobil) requires trillions in capex. Housing scarcity (D.R. Horton, Home Depot, Lennar) is a structural imbalance. Healthcare innovation (Abbott, Eli Lilly, UnitedHealth) rides longevity and med-tech advances. Cybersecurity (Cisco, CrowdStrike, Palo Alto) is non-discretionary. Generational wealth transfer (BlackRock, Morgan Stanley, Schwab) reshapes capital flows. The AI productivity super-cycle is real, but thematic allocations across these shifts offer broader, smarter US exposure.

Report by Belkin Report

While Utilities outperformance is being attributed to greater energy demands of AI and EVs, many “boring” electric utilities without obvious AI potential are up DD % over the last few months (AES, Dominion Energy, PSEG). Furthermore, Consumer Staples has an early outperform forecast in Michael Belkin's proprietary times series analysis model - another risk-off signal. The AI and Tech obsession obscures a bigger trend: many Tech stocks are declining. The CLOU cloud software ETF is down -15% since early Feb. Former leading new-era disruptors are top Sell recommendations (Uber, Meta, Netflix). Even Nvidia remains a Sell and its biggest risk is something nobody is talking about: its chips are made in Taiwan.