The Actavis acquisition ratcheted Watson's balance sheet leverage, but overall the firm remains in solid financial shape. Management has already announced an aggressive debt paydown plan over the next couple of years that should bring WPI back around its historical averages -- with rising analyst sentiment in play this week, we're betting on shares.
Utility firm PPL Corporation (PPL - Get Report) boasts a diversified business ranging from 11,200 megawatts of generation capacity to regulated utility service to electricity customers in Pennsylvania, Kentucky, Virginia, Tennessee, and the UK. PPL also distributes natural gas to Kentucky. In recent years, PPL has been increasing its focus on the regulated side of the business, entering new markets to reduce the huge exposure to the risks merchant energy generation. In doing so, PPL is becoming a dramatically more defensive name, especially when its 5% dividend yield is factored in.
PPL is unique in that it owns a combination of domestic and international distribution subsidiaries, exposure that other regulated utilities can't offer. As the largest energy distribution utility in the UK, PPL lays claim to compensation schemes that aren't used here at home, boosting the firm's earnings when it provides consistent, reliable power to its customers across the pond. That expertise in a foreign market should open the door to other overseas utility operations if attractive opportunities present themselves down the road.Meanwhile, the firm has been courting opportunities here at home with an aggressive capital spending plan. PPL is targeting 75% of its profits coming from the regulated side of its business by the end of the coming year -- to do that, it's been spending its way to acquire distribution customers on the outer regions of its existing network. With many utilities looking cheap right now, PPL should be getting a bargain as it balloons its base. Stericycle When you get your flu shot this fall, there's a good chance that Stericycle (SRCL - Get Report) has some role in the process. Stericycle is the largest medical waste management firm in the country, providing hospitals, medical offices, and pharmaceutical firms with a way to dispose of highly regulated biologically hazardous waste. Not surprisingly, dealing with the consumables no one else wants to touch is a lucrative business, with deep profit margins and a sticky customer base.