XLU - Sempra Energy: Growth Opportunities In California And Texas
2024-02-15 03:25:34 ET
Summary
- Sempra operates regulated utilities in California and Texas, two states with above-average growth potential. In addition, Sempra's LNG growth projects are quite attractive.
- However, SRE and the Utility Sector in general have been fighting a higher-interest rate headwind and, as a result, have been significantly lagging the broad market.
- That said, their yields have risen and with the potential for lower rates on the horizon, it seems like a time to consider a utility company like Sempra.
- SRE is due to post Q4 and full-year 2023 earnings on February 27th. Today, I'll give an earnings preview, compare the company's valuation relative to peers, and offer a recommendation.
Sempra ( SRE ) is a regulated utility that operates in California and Texas, and those states present the company with excellent growth opportunities moving forward. According to the Utilities Select Sector SPDR ETF ( XLU ) webpage , the Utility Sector currently represents only a 2.13% weighting in the S&P 500. To give you a sense of Sempra's size (market cap $43.6 billion) relative to the overall sector, the graphic below shows the top 5 holdings in the XLU ETF, with Sempra holding down the #4 position with a 4.9% weight, and just between Duke Energy ( DUK ) and American Electric Power ( AEP ):
SectorSpiders.com