When utility stocks get hammered and technical indicators flash oversold, contrarian investors tend to pay attention. The thinking goes like this: if a solid company in a traditionally stable sector gets punished too hard, maybe the market has overdone it.
The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate whether a stock is overbought or oversold. It compares a stock's performance on up days versus down days, giving traders insight into potential short-term moves. When the RSI dips below 30, the stock is typically considered oversold and may be due for a bounce.
Right now, three prominent utilities are sitting in that oversold territory. Here's what's happening with each one.
Southern Company (SO)
Southern Company has had a rough week, with shares falling roughly 4% over the past five trading days. On November 20, Barclays analyst Nicholas Campanella maintained an Equal-Weight rating on the stock but trimmed his price target from $98 down to $91. That's not exactly a vote of confidence, and the market responded accordingly.
The stock is currently trading near its 52-week low of $80.46, putting it squarely in value territory for investors who believe the selloff has gone too far.
RSI Value: 25.8
Price Action: Shares of Southern Company edged down 0.1% to close at $85.49 on Tuesday.
Technical Ratings: The stock carries a momentum score of 36.03 with a value rating of 60.59, reflecting its current beaten-down status but mixed near-term outlook.
Duke Energy Corporation (DUK)
Duke Energy has dropped approximately 6% over the past month, even as the company announced plans to invest in infrastructure upgrades across North Carolina. On November 20, Duke Energy unveiled proposals for new investments designed to enhance grid reliability and support economic expansion throughout the state.
"Our goal is to deliver reliable power at the lowest possible cost for customers," said Kendal Bowman, Duke Energy's North Carolina president. "It's important to strike the right balance of prioritizing investments that enhance the energy grid for current and future needs while also maximizing cost-saving measures for our customers."
Despite the positive infrastructure news, the stock has continued to slide and is now trading with an RSI firmly in oversold territory. The 52-week low sits at $105.20, not too far from current levels.
RSI Value: 25.6
Price Action: Shares of Duke Energy inched up 0.1% to close at $115.24 on Tuesday.
WEC Energy Group Inc. (WEC)
WEC Energy Group recently gave investors some good news in the form of a dividend increase. On December 4, the company raised its quarterly dividend from $0.8925 to $0.9525 per share, a solid bump for income-focused shareholders.
But the market hasn't exactly rewarded the move. The stock has fallen about 7% over the past month and is trading near its 52-week low of $91.94. With an RSI of 24.9, it's the most oversold of the three utilities on this list.
RSI Value: 24.9
Price Action: Shares of WEC Energy slipped 0.1% to close at $104.64 on Tuesday.
The Bottom Line
Oversold conditions don't guarantee an immediate rebound, but they do suggest that selling pressure may have been overdone. For investors looking to add exposure to the utilities sector, these three names are worth keeping on your radar. All three companies operate in regulated markets with relatively predictable cash flows, and their current technical setups could present attractive entry points for patient investors willing to ride out near-term volatility.