NEW YORK (TheStreet) -- Barclays Capital published a report Jan. 3 titled "Go With the Flow." Daniel Ford, Gregg Orrill, Theodore W. Brooks, Ross A. Fowler, M. Beth Straka and Noah Hauser have identified their most preferred power and utilities stocks for investment in 2012.
Here are the five stocks Barclays Capital is bullish about.
American Electric Power (AEP) has been given an over-weight rating by Barclays Capital.
The company received a final judgment on its Ohio generation and distribution cases on Dec. 14, 2011.The Ohio jurisdiction has substantial impact of 30% to 40% on American Electric Power's earnings, indicating a material future earnings growth. Even though both cases were settled, the stock was still trading at a 12% discount through the day of the ruling two weeks ago. However in the two weeks after the ruling, the stock outperformed the regulated group by 1.1% -- up by 7.6% vs. the 6.5% regulated group increase. Barclays Capital expects the outperformance to continue in 2012. Moreover, American Electric Power, along with other partners, announced a plan to build a gas pipeline in Ohio for the purpose of transporting Utica shale gas to the Eastern marketplace. Barclays Capital believes that American Electric Power will earn $3.10, $3.17 and $3.28 in 2011, 2012 and 2013, respectively. Although the stock has performed well recently, it still trades at an 11% discount to its peers. This is despite the new earnings visibility and a 4.5% yield indicating a 10% premium to the average dividend yield for regulated utilities. Barclays Capital has given a price target of $45 per share, indicating a regulated group utility multiple of 13.3 times Barclays' 2013 EPS estimate of $3.28, plus $1/share of cash. Jim Simons' Renaissance Technologies had the largest stake in AEP among the 350-plus hedge funds we are tracking. Northeast Utilities (NU)/NSTAR (NST) has been given an over-weight rating by Barclays Capital. In the view of Barclays Capital, once the company's merger with NSTAR is finalized, it should create one of the best-positioned large-cap regulated utilities in Barclays Capital's coverage universe.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV