As U.S. equity markets continue to trend sideways, investors have moved towards traditional safe havens such as bonds and gold in order to protect their assets from the financial storm. Many have also embraced more recession-proof industries as well for their equity exposure, with funds focused on the consumer staples and utility sectors standing out as attractive to investors looking to dial down the risk without fleeing equities altogether. Some have ventured beyond traditional big names in these sectors and have looked at smaller-cap companies that may provide investors with a higher level of risk in a lower-risk industry.

A great example of this is the Piedmont Natural Gas Company (NYSE: PNY), a small utility company with a market cap under $2 billion that pays out a handsome dividend yield of 4%. As the name suggests, the company focuses on natural gas distribution in much of the mid-Atlantic and serves nearly one million retail customers. The company will be in focus today due to its earnings report, which is likely to show a loss for the company. Analysts, on average, expect the company to post a loss of 11 cents per share on revenue of $184.88 million. In the year-ago quarter, the company posted a loss of 10 cents per share on revenue of $180.20 million.

As one of the larger companies in the regional gas market, PNY looks to set the tone for a variety of small players in the market which focus on gas distribution in just a few states. The report also will show the company's outlook for the remainder of the year, which should be of particular interest to investors who have positions in small cap utility firms. With this earnings report ahead, the S&P SmallCap Utilities Portfolio (XLUS), which allocates 10.5% of its assets to Piedmont, could be active in Thursday trading [also see Beyond XLU: Three Utility ETFs Worth A Look].

XLUS tracks the S&P SmallCap 600 Utilities Index which consists of common stocks of U.S. utility companies. These companies are principally engaged in providing either energy, water or natural gas utilities. These companies may include companies that generate and supply electricity, including electricity wholesalers; distribute natural gas to customers; and provide water to customers, as well as dealing with associated wastewater. In addition to a heavy weighting in PNY, the fund offers a large allocation to New Jersey Resources (NYSE: NJR) (8.5%) and Southwest Gas Corp (8%). Since its inception in early April, the fund is about even, but has posted a gain of almost 9% over the past three months -- slightly less than the gain for the larger Utilities SPDR (NYSE: XLU).

Look for PNY and the small cap utility sector to be in focus throughout Thursday's trading session [also read Nine Twists On Sector ETF Investing].

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Disclosure: No positions at time of writing.

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