While market overall volatility appears to be subsiding, the S&P 500 is gradually approaching the peak established last February. PSIMON currently classifies four S&P sectors in the low volatility regime (regime 1) and seven in the moderate volatility regime (regime 2). Using the area plot located below the following S&P 500 graph, we see that despite a significant reduction in volatility, as evidenced by the decrease in the red area, the level of the blue area remains below its average level preceding the market correction at the beginning of the year. Therefore, we can estimate the overall market risk level as slightly elevated, and for this reason, the search for resilient stocks is still very relevant.

Recently, the Utilities sector (XLU) has rebounded significantly, a detail that has not escaped PSIMON. Through the table in our Market Landscape, we identified XLU as the sector with the highest potential for outperforming the S&P 500, as indicated by its positive Relative Forecast and its Relative Forecast Conviction Rank, which positions it first among sectors predicted to outperform (1/5). Additionally, we observed that PSIMON has maintained its outperformance forecast for XLU for the past 28 days, suggesting appreciable stability in the current context. Finally, PSIMON classifies the Utilities sector in its lowest volatility regime. Given that this sector is inherently less volatile due to regulations surrounding the activities of the underlying firms, its presence in regime 1 confirms that it is a sector that could significantly reduce the risk level of our portfolio while potentially providing positive returns and a dividend yield superior to that of the S&P 500.

Within the Utilities sector, PSIMON ranks Atmos at the top of the list of firms it predicts will deliver returns superior to the S&P 500 over the medium term (Relative Forecast Conviction Rank). Observing the table below, we note that this forecast has been maintained for 23 days and the firm is classified in its moderate regime (regime 2). Given that this regime often proves to be a good balance between risk and performance, we therefore decided to investigate this stock further.

Upon reviewing the Asset Analyzer page, we observed that ATO has been well supported since July 2024. Although it experienced stalling periods, it rarely fell below its 50-day moving average. Additionally, despite disruptions related to American tariffs, the firm never entered its high volatility regime (regime 3). Clearly, this stock warrants a more in-depth fundamental analysis, but thanks to the information provided by PSIMON, we quickly identified it as an interesting stock worth further investigations.

Moreover, at the bottom of the Asset Analyzer page, PSIMON also displays metrics related to the different regimes encountered since the analysis period began (early 2024). Naturally, we can extend the analysis period, but for our purposes, this timeframe is appropriate.

We note that the “Days in Regime” metric indicates that ATO was in this regime for 94 days during this period (approximately 27% of the time). During the time that ATO has been in this regime, it has exhibited an annualized Sharpe Ratio (rf = 0) of 5.85, which is significantly higher than the 1.69 obtained by a buy and hold approach (far right of the graph). For a stock in the utilities sector, this type of behavior seems very interesting to us.

In summary, thanks to the information provided by PSIMON, we were able to identify a stock worthy of further analysis in just 5 to 10 minutes.

PSIMON’s AI-Driven signals enable investors to quickly identify promising stocks and ETFs in any type of market conditions. Atmos Energy (ATO) is yet another example of a stock that is worth a closer look.