BOSTON ( TheStreet) -- Utility stocks were the rage in July when investors feared a double-dip. But, in anticipation of QE2, dividend-payers trailed riskier stocks. Utilities currently comprise the cheapest U.S. sector based on earnings expectations. They also represent the most inexpensive subset of the S&P 500 despite yielding more than the U.S. 10-year Treasury bond. Here are the 10 cheapest large-cap utility stocks, from cheap to cheapest.

10. Edison International ( EIX) sells electricity in coastal and southern California. Its third-quarter profit increased 27% to $510 million, or $1.57 a share, as revenue grew 3.4%. The operating margin widened from 21% to 23%. Edison has $2 billion of cash and $12 billion of debt. Its stock trades at a trailing earnings multiple of 9.5, a forward earnings multiple of 12, a book value multiple of 1.1 and a cash flow multiple of 3.3, 34%, 5%, 32% and 39% discounts to utility peer averages. Half of the analysts covering Edison rate it "buy" and half rate it "hold."

Dividend Growth: Edison pays a dividend yield of 3.3% with a payout ratio of 32%. It has a three-year dividend growth rate of 2.8% and five-year growth of 4.7%.

Bullish Scenario: RBC Capital Markets expects Edison's stock to advance 19% to $45.

Bearish Scenario: Citigroup values Edison's stock at $33, implying it is 15% above fair value.

9. Teco Energy ( TE) generates, purchases and sells electricity in Florida. It also sells natural gas. Its third-quarter profit decreased 21% to $51 million, or 24 cents a share, as revenue inched up 0.6%. The operating margin declined from 18% to 17%. Teco has $166 million of cash and $3.4 billion of debt. Its stock sells for a forward earnings multiple of 12, a book value multiple of 1.7 and a cash flow multiple of 4.7, 13%, 12% and 24% discounts to multi-utility averages. Of analysts following Teco, six rate it "buy" and 11 rate it "hold." Two rank the shares "sell."

Dividend Growth: Teco offers a dividend yield of 4.8% with a payout ratio of 75%. It has a three-year dividend growth rate of 1.7% and five-year growth of 1.4%.

Bullish Scenario: FBR Capital Markets predicts that Teco's stock will rise 5% to $18.

Bearish Scenario: Deutsche Bank offers a target of $15.50, suggesting 9% downside.

8. NextEra Energy ( NEE), formerly FPL Group, operates the third-largest nuclear power-generation fleet in the U.S. It also generates electricity using wind and solar power. Its third-quarter profit gained 35% to $721 million, or $1.74 a share, as revenue ascended 4.9% to $4.7 billion. The operating margin extended from 19% to 24%. NextEra's stock trades at a book value multiple of 1.6, a sales multiple of 1.4 and a cash flow multiple of 5.7, on par with utility averages. Still, 15 analysts rate its stock "buy" and eight rate it "hold." No analysts rank its shares "sell."

Dividend Growth: NextEra pays a dividend yield of 3.7% with a payout ratio of 40%. It has a three-year dividend growth rate of 7.1% and a five-year growth rate of 7%.

Bullish Scenario: JPMorgan forecasts that NextEra's stock will climb 19% to $64 in 12 months.

Bearish Scenario: Sanford Bernstein values NextEra at $51, implying 5% downside in the next year.

7. American Electric Power ( AEP) generates electricity using coal, natural gas, nuclear and hydroelectric sources. Its third-quarter profit expanded 25% to $556 million, or $1.16 a share, as revenue increased 15% to $4.1 billion. The operating margin stretched from 24% to 25%. American Electric has $1.4 billion of cash and $19 billion of debt. Its stock sells for a forward earnings multiple of 12 and a book value multiple of 1.3, 11% and 18% discounts to peer averages. Of analysts following the stock, 12 rate it "buy" and nine rate it "hold." None rank it "sell."

Dividend Growth: American Electric Power offers a dividend yield of 5% with a payout ratio of 64%. The stock has a three-year dividend growth rate of 2.7% and a five-year dividend growth rate of 3.8%.

Bullish Scenario: JPMorgan expects American Electric's stock to appreciate 21% to $44.

Bearish Scenario: UBS offers a target of $37, suggesting the stock is just below fair value.

6. FirstEnergy ( FE) owns a variety of regulated and unregulated electric utilities. Its third-quarter profit tumbled 24% to $179 million, or 59 cents a share, as revenue gained 8.4%. The operating margin extended from 15% to 20%. FirstEnergy has $632 million of cash and $15 billion of debt. Its stock trades at a forward earnings multiple of 11, a book value multiple of 1.2, a sales multiple of 0.8 and a cash flow multiple of 3.5, 13%, 21%, 40% and 35% discounts to industry averages. Just three analysts rate it "buy" while eight rate it "hold." Two rank the shares "sell."

Dividend Growth: FirstEnergy pays a dividend yield of 6.2% with a payout ratio of 80%. It has three-year dividend growth of 3.2% and five-year growth of 5.7%.

Bullish Scenario: Sanford Bernstein predicts that FirstEnergy's stock will advance 37% to $49.

Bearish Scenario: Jefferies values FirstEnergy at $30.50, suggesting that it will decline 15%.

5. Entergy ( ETR) is an integrated energy company that owns and operates power plants and nuclear-power generators. Its third-quarter net income rose 8.2% to $498 million, but earnings per share jumped 13% to $2.62. Revenue stretched 13% to $3.3 billion. The operating margin contracted from 28% to 23%. Entergy's stock sells for a trailing earnings multiple of 10, a forward earnings multiple of 11 and a cash flow multiple of 3.2, 28%, 16% and 40% discounts to utility peer averages. Seven researchers advise purchasing the stock and 13 advise holding it.

Dividend Growth: Entergy offers a dividend yield of 4.6% with a payout ratio of 46%. Its stock has a three-year dividend growth rate of 7.9% and a five-year dividend growth rate of 8.5%.

Bullish Scenario: BMO Capital Markets forecasts that Entergy's stock will climb 26% to $92.

Bearish Scenario: Citigroup offers a target of $72, implying that the stock has passed fair value.

4. Public Service Enterprise ( PEG) sells electricity and natural gas in the Northeast and Mid-Atlantic regions. Third-quarter profit increased 16% to $567 million, or $1.12 a share, as revenue gained 7.1%. The operating margin rose from 30% to 31%. Public Service Enterprise's stock trades at a trailing earnings multiple of 9.8, a forward earnings multiple of 11 and a book value multiple of 1.7, 33%, 21% and 13% discounts to multi-utility averages. Of analysts covering Public Service, 13 rate its stock "buy" and five rate it "hold." One analyst ranks it "sell."

Dividend Growth: Public Service Enterprise pays a dividend yield of 4.3% with a payout ratio of 42%. It has a three-year dividend growth rate of 5.4% and a five-year dividend growth rate of 4.1%.

Bullish Scenario: Jefferies expects Public Service's stock to climb 17% to $37.50 in 12 months.

Bearish Scenario: Barclays values the stock at $32, suggesting that it is trading at fair value.

3. PPL Corp. ( PPL) is an electric utility in the U.S. and U.K. Third-quarter profit multiplied to $248 million, or 62 cents a share, hurt by special item charges in the year-ago quarter. Revenue increased 22%. The operating margin rose from 9.6% to 26%. PPL has $4.9 billion of cash and $9 billion of debt. Its stock sells for a forward earnings multiple of 10, a 23% discount to its peer average. It's fairly valued based on book value and cash flow. Of researchers following PPL, six advocate purchasing its shares and nine recommend holding them. None say to sell.

Dividend Growth: PPL offers a dividend yield of 5.4% with a payout ratio of 76%. It has a three-year dividend growth rate of 5.4% and five-year growth of 8.8%.

Bullish Scenario: Jefferies predicts that PPL's stock will gain 15% to $30 in the next 12 months.

Bearish Scenario: Deutsche Bank offers a target of $27, suggesting the stock is nearing fair value.

2. Exelon ( EXC) is a utility-services holding company, with subsidiaries operating in Illinois. Its third-quarter profit extended 12% to $845 million, or $1.27 a share, as revenue increased 22% to $5.3 billion. The operating margin narrowed from 33% to 27%. Exelon's stock trades at a trailing earnings multiple of 10, a forward earnings multiple of 9.8 and a cash flow multiple of 4.8, 29%, 24% and 12% discounts to electric utility industry averages. Of researchers covering Exelon, five rate its stock "buy", 13 rate it "hold" and three rank the shares "sell."

Dividend Growth: Exelon pays a dividend yield of 5.2% with a payout ratio of 54%. It has three-year dividend growth of 6.1% and five-year growth of 5.6%.

Bullish Scenario: RBC Capital Markets forecasts that Exelon's stock will rally 47% to $59.

Bearish Scenario: Macquarie values Exelon at $39, implying that the stock has surpassed fair value.

1. Constellation Energy ( CEG) is a power generator with wholesale marketing and risk management operations. It swung to a third-quarter loss of $1.4 billion, or $6.99 a share, from a profit of $167 million, or 69 cents, a year earlier. Revenue declined 1.5%. The operating margin turned negative. Constellation has $1.4 billion of cash and $4.3 billion of debt. Its stock sells for a forward earnings multiple of 8.5, a book value multiple of 0.8 and a sales multiple of 0.4, 72%, 56% and 74% discounts to peer averages. Just 19% of analysts rate it "buy."

Dividend Growth: Constellation offers a dividend yield of 3.3% with a payout ratio of 6%, affected by one-time gains. Its quarterly dividend has fallen from a high of 48 cents in 2009 to 24 cents in recent quarters.

Bullish Scenario: Jefferies predicts that Constellation's stock will rally 38% to $40 in the next year.

Bearish Scenario: Barclays expects Constellation's stock to stagnate at $29 for 12 months.

-- Written by Jake Lynch in Boston.

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