NEW YORK (TheStreet) -- The S&P 500 Index has gained 4.9% so far in 2011, while the Dow Jones Utilities Average (XME) advanced 2.2%. Overall, utility stocks are less volatile because of stable cash flows and provide limited upside, or downside, in comparison to other sectors.For instance, upsides for industry majors such as Southern Company ( SO), Exelon ( EXC), Dominion Resources ( D), Duke Energy ( DUK), NextEra Energy ( NEE), PG&E ( PCG), American Electric Power ( AEP) and Spectra Energy ( SE) are expected in the range of -3% to 9% over the next 12 months, according to consensus estimates of analysts surveyed by Bloomberg. Nonetheless, the following 10 utility stocks with an upside range of 14%-65% will likely outperform their peers, according to analysts' estimates of 12-month target prices. Most of these stocks have superior buy and hold ratings, compared to peers. In addition to growth potential, these stocks offer high dividend yields relative to several other sectors. However, rising energy costs will likely moderate dividends of electric utility companies. To sustain profits and for higher dividend yields, utility companies may seek mergers and acquisitions. Last month, Duke Energy announced to buy Progress Energy ( PGN) for $13.7 billion in stock.
DUK), NRG Energy ( NRG), Enersis ( ENI), Dynegy ( DYN), Constellation Energy ( CEG) and Edenor ( EDN) had ROEs of 5.1%, 13.2%, 13.4%, -33.6%, -11.9% and 4.2%, respectively. Of the seven analysts covering the stock, five recommend buying and two rate holding. On average, analysts polled by Bloomberg expect the stock to rise 14% over the next 12 months.
ARTNA) are expected to return around -1%, 7% and 9%, respectively. Of the seven analysts covering the stock, two recommend buying and five suggest holding.
PNNW) are trading at PE multiples of 25.8, 18.4, 24.8 and 33.6, respectively. In addition, American States Water's EV-to-EBITDA ratio of 7.8 is below that of its competitors. Of the five analysts covering the stock, one recommends buying, three rate holding and one suggests selling. The stock's average price target, based on analysts surveyed by Bloomberg, is $39.5, about 17% higher than the current level.
PEG) and Ormat Technologies ( ORA) have dividend yields of 5.1%, 4.1%, 4.1% and 1.0%, respectively. Of the 12 analysts covering the stock, 7 recommend buying, 2 rate holding and 3 suggest selling. The stock's average price target is $20.6, 17% above current level, based on analysts surveyed by Bloomberg.
ALE), ITC Holdings ( ITC), Integrys Energy Group ( TEG), Calpine ( CPN), and CenterPoint Energy ( CNP) are likely to return around 4%, 10%, -5%, 9% and 5%, respectively. Of the 18 analysts covering the stock, 7 recommend buying and 11 suggest holding.