Salient to Investors:

Morningstar reports mutual fund and ETF fund assets in utilities increased more than 30 percent in the 12 months through July.

Utilities typically trade at a 20 percent valuation discount to the S&P 500. The P/E ratio of the Bloomberg Industries North American regulated integrated utilities is 14.9 times estimated 12-month earnings versus 12.8 for the S&P 500.

Brad Sorensen at the Schwab Center for Financial Research has never seen today’s speculative element to utilities – Schwab has a market perform rating for the sector for the next 3 to 6 months.

Russ Koesterich at iShares said the P/E premium of U.S. utilities is not because they are more profitable than in the past – they are currently less profitable than their long-term average.

Return on earnings for U.S. large-cap utility companies is 10.5 percent, the lowest level since 2004.

Roger Conrad at Utility Forecaster said the utilities are in good financial shape and run very conservatively now.

Maura Shaughnessy at MFS Utilities fund likes European utilities because the macro economic picture there is hurting everybody and they have lifetime values she has never seen in Europe.

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