Core Viewpoint - Fortis has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system focuses on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3]. - Institutional investors often adjust their valuations based on earnings estimates, leading to significant stock price movements when estimates are revised [3]. Fortis Earnings Outlook - Fortis is projected to earn $2.66 per share for the fiscal year ending December 2026, with no year-over-year change expected [7]. - Over the past three months, the Zacks Consensus Estimate for Fortis has increased by 4%, reflecting a positive trend in earnings estimates [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [6]. - The upgrade of Fortis to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [9].

Core Viewpoint - Investors in Fortis Inc. should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the Mar 20, 2026 $30.00 Put option [1] Group 1: Implied Volatility - Implied volatility indicates the market's expectations for future price movements, with high levels suggesting potential significant changes or upcoming events that could impact the stock [2] - Options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of options value if the stock does not move as expected [4] Group 2: Analyst Sentiment - Fortis currently holds a Zacks Rank 3 (Hold) within the Utility - Electric Power Industry, which is positioned in the bottom 40% of the Zacks Industry Rank [3] - Over the past 60 days, two analysts have raised their earnings estimates for Fortis for the current quarter, resulting in a consensus estimate increase from 73 cents per share to 76 cents per share [3]

Core Insights - The article highlights five overlooked stocks that remain resilient during periods of market fear, as indicated by the rising VIX and declining consumer confidence [1] Group 1: Market Context - The CBOE Volatility Index (VIX) reached 31.77, an increase of 83.0% from the previous month, indicating heightened market fear [1] - The S&P 500 is down 1.5% year-to-date, while consumer sentiment is at 56.4, below the recessionary threshold of 60 [1] Group 2: Featured Stocks - **Fluor (NYSE: FLR)**: Stock up 23.24% over the past year and 13.75% year-to-date, despite a recent 13.82% drop due to a challenging Q4. The company has a $1.4 billion share repurchase program and a recovery thesis supported by $1.35 billion from NuScale monetization [1] - **Interactive Brokers (NASDAQ: IBKR)**: Stock up 40.64% over one year, benefiting from increased trading volume and net interest income. Commission revenue rose 22% and net interest income rose 20% year-over-year in Q4 2025 [1] - **Medtronic (NYSE: MDT)**: Revenue grew 8.74% year-over-year to $9.017 billion, with strong performance in cardiovascular and diabetes segments. The company has a history of consistent dividend growth for over 25 years [1] - **Fortis (NYSE: FTS)**: Stock up 30.46% over one year and 10.94% year-to-date, with a dividend yield of 4.34%. The company has a low beta of 0.443 and a strong record of annual dividend increases for over 50 years [1] - **Ameren (NYSE: AEE)**: Stock up 14.80% over the past year, with a strong operating cash flow of $3.353 billion. The company has a long-term EPS growth target of 6% to 8% through 2030, supported by a $31.8 billion infrastructure investment plan [1]

Economic Overview - Wholesale prices increased by 0.5% month-over-month in January, exceeding the consensus estimate of 0.3%, and rose 2.9% year-over-year [3][10] - Core PPI, excluding food and energy, jumped 0.8% month-over-month and 3.6% year-over-year, both figures above the Federal Reserve's 2% target [4][10] - A shrinking labor market is raising concerns about the economy's health and increasing fears of a recession [6] Market Sentiment - Recent tech selloff has put pressure on stocks, leading to a decline in all three major indexes and erasing most gains for the year in February [1] - The Federal Reserve maintained interest rates in the range of 3.25-3.5% during its January meeting, which may affect investor sentiment following the latest inflation readings [5] Defensive Stock Recommendations - **Atmos Energy Corporation (ATO)**: Engaged in regulated natural gas distribution, serving 3.3 million customers across eight states, with an expected earnings growth rate of 9% and a current dividend yield of 2.14% [7][8][10] - **Consolidated Water Co. Ltd. (CWCO)**: Focuses on seawater desalination and water distribution, with an expected earnings growth rate of 11.6% and a current dividend yield of 1.48% [11][12][10] - **Fortis, Inc. (FTS)**: Operates in electric and gas utility sectors, with an expected earnings growth rate of 5.4% and a current dividend yield of 3.24% [13][10]

Core Viewpoint - There are significant opportunities in dividend stocks that can provide strong total returns over the long term, despite existing market risks [1] Group 1: Investment Opportunities - Three highlighted stocks offer healthy dividend yields, solid balance sheets, and impressive cash flow generation capabilities [3] - Enbridge (ENB) has a dividend yield in the mid-5% range and has maintained uninterrupted dividends for over 70 years, with 31 consecutive years of increases [4] - Fortis (FTS) is a utility company benefiting from structural tailwinds and is expected to deliver 6-7% annual dividend increases over the next five years [10] Group 2: Company Profiles - Enbridge's cash flow is stable due to long-term volume contracts, making it a defensive dividend stock in the energy sector [5] - Enbridge's payout ratio exceeds 100%, but management is focused on debt reduction and improving operating efficiency [6] - Fortis serves millions of customers across Eastern Canada, the U.S., and the Caribbean, positioning it well for future energy demand [8][9]

Core Thesis - Fortis Inc. is viewed positively due to its regulated utility model, which offers predictable growth rather than hyper-growth, with a current share price of $56.33 and trailing and forward P/E ratios of 22.70 and 21.41 respectively [1][2] Financial Performance - The company is expected to achieve a revenue CAGR of approximately 9% in the near term, supported by a regulated asset base projected to grow at about 6.5% annually, reaching around $53 billion by 2029 through a $26 billion capital plan focused on transmission, distribution, and clean energy infrastructure [3][4] Competitive Position - Fortis benefits from a strong competitive moat due to its exclusive regulated service territories across Canada, the U.S., and the Caribbean, although this advantage comes with capped returns set by regulators, ensuring stability but limiting upside potential [4][5] Dividend and Culture - The company has a conservative culture, demonstrated by over 50 consecutive years of dividend increases, which supports financing access and investor confidence, despite facing challenges in adapting to technological changes [5][6] Risks and Concerns - Key risks include regulatory pushback as customer bills rise, high leverage of approximately $48 billion, interest-rate sensitivity, and reliance on external financing due to negative free cash flow coverage of dividends [5][6] Long-term Outlook - While significant sales growth would likely require a large acquisition rather than organic growth, the long-term opportunity remains tied to grid modernization and renewable integration, with steady earnings compounding expected over time [4][6]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Fortis (FTS) - Fortis currently holds a Momentum Style Score of A and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [3][4] - The stock has shown a price increase of 5.24% over the past week, outperforming the Zacks Utility - Electric Power industry, which rose by 4.55% [6] - Over the past month, Fortis shares increased by 9.45%, compared to the industry's 7.16% [6] - In the last quarter, Fortis shares rose by 10.22%, and over the past year, they increased by 26.65%, while the S&P 500 only moved 1.74% and 13.08%, respectively [7] Trading Volume - Fortis has an average 20-day trading volume of 1,059,620 shares, which is a useful indicator of market interest and price movement [8] Earnings Outlook - In the past two months, four earnings estimates for Fortis have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $2.56 to $2.63 [10] - For the next fiscal year, two estimates have also moved upwards, with no downward revisions [10] Conclusion - Given the strong momentum indicators and positive earnings outlook, Fortis is positioned as a promising investment opportunity [12]

Financial Data and Key Metrics Changes - Reported earnings per common share for Q4 2025 were CAD 0.83, CAD 0.04 higher than Q4 2024, with adjusted EPS at CAD 3.53, a 25-cent increase from 2024 [11][12][13] - Reported EPS for 2025 was CAD 3.40, reflecting a 16-cent increase from 2024, despite losses from the disposition of investments in Belize and Turks and Caicos [13][16] - The company achieved a one-year total shareholder return of nearly 24% and average annual total shareholder returns of approximately 10% over the past 20 years [6][16] Business Line Data and Key Metrics Changes - Western Canadian utilities contributed a 10-cent increase in EPS, driven by rate-based growth, particularly from FortisBC's investment in the Eagle Mountain Pipeline Project [14] - U.S. electric and gas utilities delivered an eight-cent increase in EPS, with Central Hudson benefiting from rate-based growth and cost rebasing [14] - ITC's capital investments and related rate-based growth increased EPS by CAD 0.04, moderated by higher stock-based compensation and finance costs [15] Market Data and Key Metrics Changes - In Arizona, the Arizona Corporation Commission approved an energy supply agreement for approximately 300 MW to support a planned data center, with a 10-year contract including a 75% minimum billing requirement [8][9] - The company is negotiating for an additional 300 MW capacity at the same site and a second site in the range of 500-700 MW, with potential new generation investments estimated at CAD 1.5 billion to CAD 2 billion through 2030 [9][10] Company Strategy and Development Direction - The company rolled out a CAD 28.8 billion five-year capital plan, focusing on regulated investments primarily in transmission and distribution assets, expecting a 7% average annual rate base growth [6][7][20] - The strategy includes maintaining a commitment to 4%-6% annual dividend growth through 2030, supported by strong capital investments and operational efficiency [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory environment and ongoing projects, particularly in Arizona and ITC, highlighting the importance of affordability and customer service [23][30][65] - The company is focused on executing its capital plan while addressing cost pressures and maintaining reliability and safety in operations [5][20] Other Important Information - The company has maintained a strong liquidity position with CAD 2.7 billion of long-term debt issued in 2025 and nearly CAD 4 billion available on credit facilities [16][17] - S&P confirmed the company's A- issuer rating and revised the outlook from negative to stable, reflecting improving financial measures [17] Q&A Session Summary Question: Data center opportunity in Arizona - Management explained that the energy supply agreement is structured to ensure affordability and cost recovery, with the customer covering interconnection costs [22][23] Question: Updates from FERC - Management noted optimism regarding potential movement on ongoing FERC matters, emphasizing the new chair's focus on regulatory clarity [28][30] Question: UNS Gas rate case - Management indicated that the upcoming ACC open meeting could provide clarity on the formulaic rate structure, but advised waiting for the meeting for specific insights [69][70] Question: LNG projects in British Columbia - Management confirmed that while there are no new announcements, they are looking for additional investment opportunities in LNG projects [43] Question: Customer affordability feedback - Management acknowledged that affordability is a significant concern across jurisdictions, with ongoing efforts to address it consistently [62][65]

Financial Data and Key Metrics Changes - Reported earnings per common share for Q4 2025 were CAD 0.83, an increase of CAD 0.04 compared to Q4 2024 [11] - Reported EPS for 2025 was CAD 3.40, up CAD 0.16 from 2024, while adjusted EPS was CAD 3.53, an increase of CAD 0.25 [13][16] - The company achieved a one-year total shareholder return of nearly 24% and average annual total shareholder returns of approximately 10% over the past 20 years [6] Business Line Data and Key Metrics Changes - Western Canadian utilities contributed a CAD 0.10 increase in EPS, driven by rate base growth, including FortisBC's investment in the Eagle Mountain Pipeline Project [13] - U.S. electric and gas utilities delivered an eight-cent increase in EPS, with Central Hudson's growth attributed to rate base growth and cost rebasing [14] - ITC's continued capital investments and related rate base growth increased EPS by CAD 0.04, moderated by higher stock-based compensation and finance costs [15] Market Data and Key Metrics Changes - In Arizona, the energy supply agreement for a planned data center was approved, supporting a 300 MW capacity with a 75% minimum billing requirement [8] - The company is negotiating for an additional 300 MW capacity at the same site and a second site in the range of 500-700 MW [9] - The BCUC's approval of the Tilbury LNG storage expansion project provides up to CAD 300 million of potential incremental capital [9] Company Strategy and Development Direction - The company rolled out a CAD 28.8 billion five-year capital plan, focusing on regulated investments primarily in transmission and distribution assets [6][7] - The plan is expected to drive a 7% average annual rate base growth and support a 4%-6% annual dividend growth guidance through 2030 [20] - The company is focused on incremental growth opportunities, including customer connections and MISO LRTP projects [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory environment and the potential for improved earnings guidance as clarity increases [75] - The company is committed to addressing affordability concerns while ensuring reliable service and maintaining strong shareholder returns [6][65] - Management highlighted the importance of executing the capital plan to support long-term growth and shareholder value [20] Other Important Information - The company maintained a strong liquidity position with CAD 2.7 billion of long-term debt issued in 2025 and nearly CAD 4 billion available on credit facilities [16] - S&P confirmed the company's A- issuer and BBB+ senior unsecured debt ratings, revising the outlook from negative to stable [17] Q&A Session Summary Question: Data center opportunity in Arizona - Management explained that the energy supply agreement is structured to ensure affordability and cost recovery without requiring additional investments [22][23] Question: Updates from FERC - Management noted that while there has been chatter about FERC developments, no specific updates have been received [28][30] Question: UNS Gas rate case - Management indicated that the upcoming ACC open meeting could provide clarity on the formulaic rate structure [69][70] Question: Customer affordability feedback - Management acknowledged that affordability is a significant concern across jurisdictions and emphasized the company's commitment to addressing it [62][65]

Financial Data and Key Metrics Changes - In 2025, reported earnings per common share were CAD 3.40, an increase of CAD 0.16 compared to 2024, while adjusted EPS was CAD 3.53, up CAD 0.25 from the previous year [13][17] - The company achieved a one-year total shareholder return of nearly 24%, with average annual total shareholder returns of approximately 10% over the past 20 years [6][11] - The company maintained a strong liquidity position with CAD 2.7 billion of long-term debt issued in 2025 and nearly CAD 4 billion available on credit facilities at year-end [17][18] Business Line Data and Key Metrics Changes - Western Canadian utilities contributed a CAD 0.10 increase in EPS, driven by rate-based growth, including earnings from FortisBC's investment in the Eagle Mountain Pipeline Project [13][14] - U.S. electric and gas utilities delivered an eight-cent increase in EPS, with Central Hudson's growth attributed to rate-based growth and cost rebasing [14][15] - ITC's continued capital investments and related rate-based growth increased EPS by CAD 0.04, moderated by higher stock-based compensation and finance costs [16] Market Data and Key Metrics Changes - The Arizona Corporation Commission approved an energy supply agreement for approximately 300 MW to support a planned data center, with a 10-year contract including a 75% minimum billing requirement [9][24] - The company is negotiating for an additional 300 MW of capacity for the data center and exploring further capacity at a second site in the range of 500-700 MW [10][24] - The company is also focused on energy efficiency programs to help customers lower their bills and provide assistance to low-income customers [6][11] Company Strategy and Development Direction - The company rolled out a CAD 28.8 billion five-year capital plan, primarily focused on transmission and distribution assets, expecting a rate base increase of CAD 16 billion and average annual rate base growth of 7% [7][8] - The company aims to support 4%-6% annual dividend growth through 2030, continuing its commitment to increasing dividends for 52 consecutive years [11][21] - The company is actively pursuing incremental growth opportunities, including customer connections and MISO LRTP projects, while evaluating competitive bidding opportunities [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory environment, noting that the new chair of FERC is focused on improving the commission's operations and providing regulatory certainty [30][31] - The company is committed to addressing affordability concerns and ensuring that growth is achieved in a responsible manner for customers [25][62] - Management highlighted the importance of maintaining a strong focus on safety and reliability, with 2025 being one of the best years on record for these metrics [5][21] Other Important Information - The company was recognized for its governance practices, ranking number one in governance out of 206 companies in the S&P/TSX Composite Index [4] - The company has not utilized its CAD 500 million ATM program to date, which remains available for funding flexibility [17][18] Q&A Session Summary Question: Data center opportunity in Arizona - Management explained that the energy supply agreement is structured to ensure affordability and stability for customers, with the data center covering costs without requiring additional investments [24][25] Question: Updates from FERC - Management noted that while there has been chatter about potential updates, no specific information has been received, but there is optimism for movement on ongoing matters [29][30] Question: UNS Gas rate case - Management indicated that the upcoming ACC open meeting could provide clarity on the formulaic rate structure, but it is advisable to wait for the meeting for more information [69][70]