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Tickers in this Article: WPZ, NKA, NRG, MGEE, BKH, ETP, SWX
The morning has been good for the market. The Nasdaq has climbed 0.1%; the S&P 500 is trading up 0.2%; and the Dow is up 0.3%. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.

Despite a good day for the overall market so far, the Utilities sector (XLU) is down 0.2% and its current biggest movers are:
CompanyMarket CapPercentage Change
Williams Partners L.P. (NYSE:WPZ)$18.33 billion-4.4%
Niska Gas Storage Partners LLC (NYSE:NKA)$854.4 million+3%
NRG Energy (NYSE:NRG)$4.45 billion+2.7%
MGE Energy, Inc. (Nasdaq:MGEE)$1.12 billion+2.6%
Black Hills Corp (NYSE:BKH)$1.35 billion+2.3%
Energy Transfer Partners LP (NYSE:ETP)$10.9 billion-2.3%
Southwest Gas Corporation (NYSE:SWX)$2.05 billion-2.2%
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Slipping 4.4%, Williams Partners (NYSE:WPZ) is currently trading at $50.75 per share. With 4.9 million shares changing hands so far today, the company's volume is 10 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. WPZ has a PEG ratio of -3.0. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Niska Gas Storage (NYSE:NKA) has risen 3% and is currently trading at $12.88 per share. So far today, the company's volume is 36,963 shares. This is a sign that there will be less trading activity than there was yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. NKA has a P/B ratio of 1.27 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Investment Valuation Ratios: Price/Book Value Ratio

NRG (NYSE:NRG) is at $20.07 per share after an increase of 2.7%. At 2.1 million shares, the company's volume so far today is in keeping with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. Dividend yield measures the income that a stock will generate for an investor. NRG has a low dividend yield of 1.8%. If you are an income investor, this stock may not be attractive to you. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Dividend Yield For The Downturn

After an increase of 2.6%, MGE Energy (Nasdaq:MGEE) has reached a current price of $49.70. The company's volume for the day so far is 24,549 shares. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 16.61, MGEE's P/E ratio of 18.9 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Investment Valuation Ratios: Price/Earnings Ratio

After rising 2.3%, Black (NYSE:BKH) is currently trading at a share price of $31.39. The company's volume is currently 195,706 shares for the day, in keeping with the average volume over the past three months. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for BKH is 67.8%, which is relatively high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Energy Transfer (NYSE:ETP) is down 2.3% to reach $43.37 per share. So far today, 633,707 shares of the company's stock have changed hands. This is on pace to reach yesterday's trading volume of 1.2 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. The P/S ratio for ETP is 1.66, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Currently trading at $43.52 per share, Southwest (NYSE:SWX) has fallen 2.2%. At 86,952 shares, the company's volume so far today is consistent with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. The capitalization ratio for SWX is 47.8%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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