In the trash heap that is the stock market, one industry stands apart: utilities.

Utility companies make up the most attractive sector by far, according to TheStreet.com Ratings' proprietary quantitative model, which takes a "safety-first" approach. In terms of points awarded by the model, utilities get 4.54 on a scale of one to 10, with the next closest industry, consumer staples, almost a full point behind.

Even more appealing is the rate of change in those points over the past year. As industrials, materials and energy shares plummeted by 18%, 17%, and 18.75% in October, respectively, utilities declined just 9.4%. That has opened the quality gap between those industries, highlighting utilities as the most stable sector.

A Comparison of All Industries
Far and Away the Leader
chart
TheStreet.com Ratings

Drilling down, we can find the sub-industries that have outperformed others within utilities: electric, gas and multi-utilities. Upon further investigation, it turns out that those are higher in overall points than all but one: industrial professional services, which has only a handful of "buy"-rated companies. The utility industry as a whole, on the other hand, features 37 "buy"-rated stocks and only six "sells."

Sub-Sector Breakdown
Focusing on the Niches
chart
TheStreet.com Ratings

There are downsides to investing in utilities. The eventual market rebound probably will see these stocks rising more slowly than volatile sectors like technology. Also, profits remain tied to government regulations, so political decisions could erode margins.

Still, utilities are worth considering. The best companies within the utilities sub-industries are New Jersey Resources ( NJR), NSTAR ( NST) and Xcel Energy ( XEL).

New Jersey Resources rates the highest. The company deals in natural gas distribution in retail and wholesale markets. Over the past year, the company's stock has been blissfully immune to the market meltdown, with a beta value of 0.21. (One is a perfect correlation.) As the S&P 500 declined 44.9% over the past year, NJR has risen 8.5%, which makes the company sexy where it counts. With a dividend yield of 3.5% and an A grade from our model, this looks like a winner.

NSTAR, rated "buy," operates in energy distribution and transmission throughout Massachusetts. With an operating margin of 15.8% and a return on equity of 13.6%, the company is another stable standout. Over the past year, NST has risen 1.8%, outperforming the S&P 500 by 46.7 percentage points. The 4.7% dividend yield is an added benefit.

A third stock in this sector, also rated "buy," is Xcel Energy. The company is forward-looking, displayed in its investment in smart-grid technology and solar power. Xcel may benefit from federal stimulus dollars. And the dividend yield is a massive 5.4%.

TheStreet.com Ratings' model rewards stability and consistency over other attributes. In such volatile and uncertain times, the ratings generated by this approach to investing can be valuable. Using a top-down approach with safety-first criteria can lead to improved performance in shaky times.

'Buy'-rated utilities
GICS Industry
Company
Ticker
Overall Grade
Run Date
Gas Utilities
NEW JERSEY RESOURCES CORP
NJR
A
2/27/2009 0:00
Water Utilities
CALIFORNIA WATER SERVICE GP
CWT
B+
2/27/2009 0:00
Electric Utilities
MAINE & MARITIMES CORP
MAM
B+
2/27/2009 0:00
Gas Utilities
SOUTH JERSEY INDUSTRIES INC
SJI
B
2/27/2009 0:00
Multi-Utilities
CH ENERGY GROUP INC
CHG
B
2/27/2009 0:00
Gas Utilities
SUBURBAN PROPANE PRTNRS  -LP
SPH
B
2/27/2009 0:00
Gas Utilities
WGL HOLDINGS INC
WGL
B
2/27/2009 0:00
Gas Utilities
UGI CORP
UGI
B
2/27/2009 0:00
Multi-Utilities
NSTAR
NST
B
2/27/2009 0:00
Multi-Utilities
CONSOLIDATED EDISON INC
ED
B
2/27/2009 0:00
Water Utilities
AQUA AMERICA INC
WTR
B
2/27/2009 0:00
Multi-Utilities
WISCONSIN ENERGY CORP
WEC
B
2/27/2009 0:00
Electric Utilities
NORTHEAST UTILITIES
NU
B
2/27/2009 0:00
Multi-Utilities
PG&E CORP
PCG
B
2/27/2009 0:00
Electric Utilities
CENTRAL VERMONT PUB SERV
CV
B
2/27/2009 0:00
Gas Utilities
LACLEDE GROUP INC
LG
B
2/27/2009 0:00
Electric Utilities
ITC HOLDINGS CORP
ITC
B
2/27/2009 0:00
Independent Power Producers & Energy Traders
ENDESA-EMPR NAC ELEC (CHILE)
EOC
B
2/27/2009 0:00
Electric Utilities
MGE ENERGY INC
MGEE
B
2/27/2009 0:00
Electric Utilities
FPL GROUP INC
FPL
B-
2/27/2009 0:00
Water Utilities
AMERICAN STATES WATER CO
AWR
B-
2/27/2009 0:00
Electric Utilities
ENERSIS SA
ENI
B-
2/27/2009 0:00
Gas Utilities
ENERGY WEST INC
EWST
B-
2/27/2009 0:00
Multi-Utilities
XCEL ENERGY INC
XEL
B-
2/27/2009 0:00
Gas Utilities
RGC RESOURCES INC
RGCO
B-
2/27/2009 0:00
Gas Utilities
AGL RESOURCES INC
AGL
B-
2/27/2009 0:00
Electric Utilities
PROGRESS ENERGY INC
PGN
B-
2/27/2009 0:00
Water Utilities
MIDDLESEX WATER CO
MSEX
B-
2/27/2009 0:00
Multi-Utilities
CENTERPOINT ENERGY INC
CNP
B-
2/27/2009 0:00
Multi-Utilities
SCANA CORP
SCG
B-
2/27/2009 0:00
Multi-Utilities
DOMINION RESOURCES INC
D
B-
2/27/2009 0:00
Gas Utilities
CHESAPEAKE UTILITIES CORP
CPK
B-
2/27/2009 0:00
Gas Utilities
NORTHWEST NATURAL GAS CO
NWN
B-
2/27/2009 0:00
Multi-Utilities
AVISTA CORP
AVA
B-
2/27/2009 0:00
Multi-Utilities
SEMPRA ENERGY
SRE
B-
2/27/2009 0:00
Electric Utilities
WESTAR ENERGY INC
WR
B-
2/27/2009 0:00
Electric Utilities
DPL INC
DPL
B-
2/27/2009 0:00
Electric Utilities
FIRSTENERGY CORP
FE
B-
2/27/2009 0:00
Electric Utilities
ENTERGY CORP
ETR
B-
2/27/2009 0:00
Gas Utilities
PIEDMONT NATURAL GAS CO
PNY
B-
2/27/2009 0:00
Water Utilities
PENNICHUCK CORP
PNNW
B-
2/27/2009 0:00
Multi-Utilities
BLACK HILLS CORP
BKH
B-
2/27/2009 0:00
Electric Utilities
SOUTHERN CO
SO
B-
2/27/2009 0:00
Source: Yahoo! Finance
*these estimates may not necessarily reflect recent downward revisions.
Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level II CFA candidate.