One of the 'Safest' Parts of the Stock Market Is Getting Really Expensive

Goldman Sachs cuts ratings, price targets on two utilities stocks.

Operations At The Bureau Of Engraving And Printing As The $1 Bill Is Printed — Photographer: Andrew Harrer/Bloomberg

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By Luke Kawa and Timothy Hlavacek

June 6, 2016 at 1:53 PM UTC

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Investors taking refuge in defensive utilities stocks have pushed the sector to rich levels, according to Goldman Sachs Group Inc.

Analysts led by Michael Lapides note that regulated utilities now trade at a forward price-to-earnings ratio in excess of the S&P 500 based on estimated 2017 and 2018 earnings. That ratio is also elevated relative to the sector's five-year average.