Utilities have limped through much of 2023, but a few catalysts could lift a handful of stocks into the end of the year, according to Morgan Stanley. Utilities are a beloved play by income investors, given their dividend payments, their relative safety and their status as a bond substitute. However, this year has been a miserable one: The utility index within the S & P 500 is down 8.5% in 2023, making it the laggard in the broad index, which has risen 16.2%. The wildfires in Maui have drawn attention to how severe weather can pose a risk to utilities. Hawaiian Electric , embroiled in controversy over its potential liability in the wildfires, has plunged about 70% in 2023. Nevertheless, there could be room for some year-end upside, Morgan Stanley analyst David Arcaro said in a report last week. Already, utility stocks as a group are ahead 3.3% in September, while the S & P 500 has lost 1%. “As we head into the final stretch to the end of the year, we think investors will be particularly careful in picking their spots, watching for downside tail risk and focusing on clear and meaningful catalysts to drive performance,” Arcaro wrote. Regulatory approvals, for instance, around major projects or rate increases could propel shares higher. PPL is awaiting a regulatory decision in Kentucky on a proposal to replace 1,500 megawatts of coal-fired power generation and add solar, battery storage and two natural gas plants. That decision is expected to roll out by Nov. 6. “With low regulatory risk and a strong balance sheet, we think the stock can re-rate to a premium after the Kentucky decision clears,” wrote Arcaro. PPL shares are off more than 12% in 2023, and the company pays a 3.7% dividend yield. The analyst is also watching DTE and Exelon , as both companies have key developments coming up for rate cases this fall – that is, the process utilities go through to determine the monthly bills they charge customers. The outlook is especially rosy for Exelon, Arcaro noted. “We expect a constructive outcome in the case supporting the upper half of earnings guidance,” the Morgan Stanley analyst said. “The stock trades at a 3% premium and we think it can re-rate to a premium stock (we value at 10% premium) over time with a constructive outcome in this case and continued earnings execution.” Dettroit-based DTE is down nearly 9% in 2023 and pays a 3.6% dividend. Exelon is off 4% this year, but pays a dividend of 3.5%. Morgan Stanley has an overweight recommendation on all three utilities. – CNBC’s Michael Bloom contributed to this report.