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Where to Find Opportunities in Utilities
11 Apr 2012 EDT - CNBC.com
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Global utilities have underperformed in 2012, but opportunities exist for investors in well regulated and politically stable regions, Per Lekander, analyst at UBS, told CNBC.

“Utilities are clearly very poor performing not only this year but for three or four years, but really you have to break that down into those utilities that are really regulated not exposed to commodity prices and those that are,” Lekander explained.

He singled out UK utilities stocks, particularly Centrica and National Grid as sound investments in a volatile market and said while U.S. utilities performed well last year, stocks seem expensive at the moment.

“We are quite skeptical of (U.S. utilities stocks) in general. They are quite expensive, like 20 to 30 percent more expensive than European ones,” he said.

“We are still positive on the UK because you know I think if you invest in utilities now you invest in something which is still a low risk sector and the UK is well regulated, they are much cheaper than the U.S.,” he added.

Cautious on Europe

Lekander contrasted the UK utilities sector, which currently has an overweight rating from UBS, to the rest of Europe which is currently rated neutral.

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