Individual investors were jolted by the sudden reappearance of market volatility in October. Given a range of issues spanning natural gas availability heading into winter, oil sanctions on Iran, and an escalating trade war with China, it’s possible that increased volatility is here to stay — in the short term, at least.
That may make it worthwhile to begin looking at large-cap companies with mature businesses, which can provide stability during turbulent market periods. We asked three contributors here at The Motley Fool for the best such stocks to buy right now. Here’s why they chose NextEra Energy (NYSE:NEE), Kohl’s Corporation (NYSE:KSS), and Apple (NASDAQ:AAPL).
Investors can count on this utility’s stability
Maxx Chatsko (NextEra Energy): Many stocks coughed up a significant chunk of market cap in October, sending the S&P 500 lower by 6.9% as a result. That makes NextEra Energy stock’s 2.9% gain all the more impressive. Why did investors run to the $80 billion utility for cover?
Well, it didn’t report third-quarter 2018 earnings until the final week of October, but I think the numbers validate the idea that NextEra Energy is as solid of a business as they come. It’s not really a secret at this point, as evidenced by the stock’s thumping of the S&P 500 in the last two decades.
Nonetheless, the utility reported year-over-year growth in adjusted earnings per share of 18% for the third quarter and 14% for the first nine months of the year. It reached its full-year 2018 target for return on equity at Florida Power & Light while deploying 13% more capital (an indicator of future rate increase allowances) during the most recent quarter compared with the year-ago period. It completed the acquisition of Florida City Gas, which will provide an important growth opportunity in natural gas utility infrastructure. And its power generation business added over 1,400 megawatts of wind, solar, and storage power capacity to the backlog — getting it closer to its goal of a backlog stuffed with 40,000 megawatts of renewable power projects by 2020.
It’s a bit unfair, but having a larger capital base allows a utility to invest more into its business, thus increasing its capital base, and the cycle continues. As the largest publicly traded utility, NextEra Energy is taking full advantage of its size. It expects to grow adjusted EPS from $6.70 in 2017 to over $9.40 in 2021, while growing the dividend at around 13% per year through at least 2020. That provides a powerful argument for…
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