Canadian Utilities (CU.TO) - Swing Trade💰 CU.TO — Swing Trade Breakdown (TradingView Idea Version)
🏢 Company Snapshot
Canadian Utilities (CU.TO) is one of Canada’s largest regulated utility providers, operating electricity and natural gas transmission and distribution networks. The stock normally trades with low volatility, but a sharp pullback into the rising 50-day SMA has created a textbook mean-reversion opportunity. The November breakout remains intact, and buyers are watching for continuation toward the 42.50–43.00 zone.
📊 Fundamental Overview
CU trades at roughly 15× earnings, slightly below the typical 16–18× range for regulated utilities. Price-to-book is around 1.8×, which is fair for a steady, capital-intensive utility with predictable cash flows.
Debt-to-equity sits near 1.35, which is standard for the sector — utilities tend to run with higher leverage because of regulated, stable income streams.
Return on equity is healthy at ~10.5%, above average for Canadian utilities, showing solid profitability.
The dividend yield is ~5.5%, one of the main reasons long-term investors hold CU. Free cash flow sits around the $800–900M range, enough to support ongoing capex and maintain the dividend without excessive strain. Cash reserves (~$600M) provide decent near-term stability.
Overall: A stable, moderately valued defensive name with strong cash flow, predictable earnings, and a high, secure dividend.
📈 Trends & Catalysts
Revenue growth is running in the low-single-digit range — exactly what you expect from a regulated utility. EPS continues a slow upward trend as cost efficiency improves and rate-base expansion contributes. Cash flow is stabilizing as large capital projects wind down.
Balance sheet leverage remains elevated but normal for the sector; refinancing risk is manageable given CU’s long-duration debt structure.
Catalysts:
• Rotation back into defensive sectors
• Dividend demand during market volatility
• Upcoming regulatory decisions
• Interest-rate easing narrative benefiting utilities
• November breakout still structurally intact
Risks:
• Sensitivity to rate hikes
• Lower relative upside vs cyclical or growth sectors
• Utilities still lagging broader TSX performance over 12 months
🪙 Utilities Sector Overview
The sector is slightly red on the weekly timeframe (down ~1%), reflecting short-term hesitation. However, monthly performance has turned positive with a small uptrend as capital rotates into defensive names. Over 12 months, utilities remain an underperformer due to the interest-rate shock, but sentiment has stabilized significantly.
This backdrop is supportive for a swing setup — not aggressively bullish, but conducive to clean technical mean-reversion trades.
📐 Technical Breakdown
Price is currently around 41.13, sitting directly on top of the rising 50-day SMA (~41.10) — a level CU has respected repeatedly throughout the year. The long-term trend remains intact with the 200-day SMA around 40.20, well below current price.
RSI(2) is deeply oversold at ~5–7, which is exactly the condition that triggers high-probability RSI2 swing setups. The pullback resembles previous successful mean-reversion entries (June, November), both of which snapped back quickly into resistance.
Support sits at 40.60–41.00, with strong buyers previously stepping in at the same zone.
Resistance is 42.30–42.90, followed by a secondary level at 43.50.
Volume is stable — no signs of distribution or panic selling, indicating this is a controlled pullback into trend.
🎯 Trade Plan
Entry Zone: 41.00–41.25
Price is already in the ideal region — a clean tag of the 50-SMA with RSI2 oversold.
Stop Loss: 40.60–40.70
Placed below trendline support and the recent swing low.
Target: 42.50–42.90
A return to the prior resistance zone, consistent with past RSI2 snapbacks.
Risk/Reward: Approximately 2.0× to 2.3×
Meets the minimum threshold for a high-quality swing trade.
Alternate Setup:
If CU breaks above 42.30 with momentum, an add-on or breakout continuation toward 43.50 becomes viable.
🧠 My Take
This is a classic RSI2 SMA50 mean-reversion setup — oversold conditions, trend intact, and price sitting directly on the moving average it respects most. With utilities stabilizing and the dividend reducing downside risk, CU offers a clean, low-volatility swing back into the 42.50–43.00 area. As long as 40.70 holds, the structure remains firmly bullish.
A high-probability defensive swing with favorable risk-to-reward.
