LONDON (ShareCast) - Utilities stock were performing well on Monday afternoon, continuing their impressive year-to-date rise, after some upbeat comments about the UK water sector from UBS.
"Compared to other low-risk inflation-protected returns the UK water sector is currently highly attractive even without financial restructuring," the Swiss broker said in a research report.
"We calculate that relative to sovereign gilt yields, UK water should achieve an excess risk adjusted return of over 20% over the next 10 years pre-regulatory outperformance or net growth through investment."
United Utilities and Pennon were performing well today, trading 2.03% and 2.07% higher by the afternoon, respectively.
The FTSE 350 utility sector on the whole has now gained 18% since the start of 2013, having risen over 5.0% over the past month alone.
Severn Trent was one water stock that hasn't join in with the rally over the last few days as it pulls back from a sharp rise following a takeover approach from a consortium of foreign investors on May 14th.
The announcement saw the stock rocket to levels not seen since 2006, though Severn Trent swiftly rejected the approach after it "fail[ed] to recognise the existing and potential value" of the firm.
The shares were down 0.11% on Monday.
Elsewhere in the sector, electricity and gas provider SSE was making gains (+1.81%) ahead of its annual results on Wednesday in which is expected to reveal a solid increase in profits.
Despite Morgan Stanley keeping an 'underweight' rating on the shares on Monday, the broker said that the company is "doing a good job in tough circumstances". However, it did note that the stock is expensive, trading at 15 times earnings in the face of limited earnings growth.
Top performing sectors so far today
Electricity 10,116.77 +1.57%
Gas, Water & Multiutilities 6,240.19 +1.21%
Oil Equipment, Services & Distribution 23,493.13 +1.02%
Automobiles & Parts 7,222.29 +1.01%
Fixed Line Telecommunications 3,669.08 +0.93%
Bottom performing sectors so far today
Industrial Metals & Mining 1,730.67 -1.56%
Life Insurance 6,256.96 -1.29%
Mining 16,673.87 -0.81%
General Retailers 2,384.49 -0.69%
Forestry & Paper 9,823.48 -0.60%
BC
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