6 Utility Stocks to Light Up a Portfolio

NEW YORK (TheStreet) -- Utility stocks have performed well this year, and investors might want to energize their portfolios with names such as Enersis (ENI) and Copel (ELP)

The S&P 500 Electric Utilities Sub-industry Index has risen nearly 10.5% so far this year, and 6.1% in the past three months.

These six stocks offer attractive dividend yields. What's more, they have been posting solid operating margins.

Based on average 12-month price targets of analysts surveyed by Bloomberg, these stocks could gain from between 6% and 31%.

The stocks are listed on the following pages in ascending order of potential upside, based on analysts' targets.

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6. Cleco ( CNL), a regional energy services holding company, owns one transmission substation in Louisiana and another in Mississippi. It has two operating subsidiaries: Cleco Power and Cleco Midstream Resources.

Of the seven analysts covering the stock, four rate it a buy and three rate it a hold. There are no sell ratings on the stock. The average 12-month price target of analysts surveyed by Bloomberg is $38.17, 6.2% greater than the current price.

For the third quarter of 2011, Cleco recorded earnings of $65.8 million, or $1.08 per diluted share, vs. $49.6 million, or 82 cents per share, in the third quarter of 2010. Total retail and wholesale customer sales increased 2.2% during the quarter. For the third quarter, Cleco raised its quarterly dividend by 11.6% to 31.25 cents per share.

The company recently provided 2012 guidance, projecting EPS in the range of $2.34 to $2.44, vs. a previous view of $2.25 to $2.35. It has also raised its 2011 operational earnings guidance range to $2.42 to $2.48 per diluted share, compared with an earlier outlook for $2.40 to $2.47. The company estimates a capital-spending plan of $720.7 million for 2012 through 2016.

5. FirstEnergy ( FE) is a holding company operating through eight principal electric utility subsidiaries and affiliates.

Of the 18 analysts covering the stock, 56% rate it a buy and the rest rate it a hold. There are no sell ratings on the stock. The stock's average 12-month price target is $47.83, which is 6.2% greater than the current price, according to a Bloomberg consensus.

The company reported net income of $509 million for 2011 third quarter, or $1.22 per share, on revenue of $4.7 billion, compared with $175 million, or 59 cents per share, on revenue of $3.7 billion in the year-earlier quarter. Total electric distribution deliveries increased 2.1% during the quarter.

The company's subsidiary FirstEnergy Solutions recently signed a long-term agreement to purchase output from the Maryland Solar Farm, a green energy facility slated to become the largest solar facility in Maryland and among the largest on the East Coast upon completion.

Under the terms of agreement, the company will purchase the facility's 20 MW output for 20 years. The $70 million Maryland Solar Farm project is scheduled to become operational by 2013.

Looking ahead, based on strong third-quarter results, the company's guidance for full-year non-GAAP earnings is $3.30 to $3.50 per share. Non-GAAP earnings guidance for fiscal 2012 and fiscal 2013 is $3.20 to $3.50 per share.

4. NV Energy ( NVE) operates through six primary, wholly owned subsidiaries: Nevada Power Company, Sierra Pacific Power Company, Sierra Pacific Energy Company, NVE Insurance Company and Lands of Sierra.

Of the 15 analysts covering the stock, 53% rate it a buy and the rest rate it a hold. There are no sell ratings on the stock. The average 12-month price target of analysts surveyed by Bloombergis $16.84, which is 10.0% higher than the current price.

For the third quarter of 2011, the company recorded net income of $173.5 million, or 73 cents per share. Operating revenue for the quarter was $1.02 billion. Operating income increased to $353.2 million from $343.4 million in the year-ago quarter. In the last week of October, the company declared a cash dividend of 13 cents per share, payable Dec. 21 to shareholders of record on Dec. 6.

For 2011, the company plans to meet all the system deployment milestones to achieve NV Energize project completion by 2012. The estimated cost for NV Energize stands at $300 million with almost 516,000 smart meters installed. The company estimates it will install an additional 1.45 million smart meters by 2012.

3. ALLETE ( ALE) is an energy company operating in two business segments: regulated operations, investments and other. Regulated operations include utilities Minnesota Power and Superior Water, Light and Power Company and American Transmission Company. The investment and other businesses include BNI Coal, mining operations in North Dakota ALLETE Properties and Florida real estate investment.

Of the six analysts covering the stock, three rate it a buy. The stock's average 12-month price target is $44.50, which is 12.7% higher than the current price, as per a Bloomberg consensus.

For the third quarter, the company recorded net income of $20.5 million, or 57 cents per share, on revenue of $226.9 million, compared to $19.6 million, or 56 cents per share, on revenue of $224.1 million in the same quarter prior year. During the quarter, dividend per share increased to 44.5 cents per share from 44 cents per share recorded in the year-ago quarter.

During the quarter, total kilowatt hours sold to retail and municipal services increased to 2,742 million, vs. 2,688 million in the year-earlier quarter.

The company plans to achieve a target of average annual earnings per share growth of 5% every year while maintaining a competitive dividend, the company's CEO has said.

2. Copel ( ELP), or Companhia Paranaense de Energia, is a fully integrated electric utility in Brazil. The company engages in the business of generation, transmission and distribution of electric power. Copel runs a generating complex of 18 power plants, while its transmission system totals 1,913 kilometers of lines and 31 automated substations.

Of the six analysts covering the stock, four rate it a buy and the rest suggest a hold. There are no sell ratings on the stock. The stock's average 12-month price target is $26.00, about 27.3% higher than the current price, according to a Bloomberg consensus.

The company reported strong 2011 third-quarter net revenue of $1,235.6 million, an increase of 15.3% from the year-ago quarter, driven by higher electricity sales volumes. Net income for the quarter increased 22.1% to $209.3 million, or 76 cents per share, from the same quarter a year before. As of Sept. 30, the company had 3.88 million customers, vs. 3.81 million as of June.

For the first nine months of 2011, the upturn in COPEL's captive market consumption was 5.5%, or 16,858 GWh.

For fiscal 2011, COPEL has a capital investment plan of 2,060.5 million reals, with 49.7% on generation and transmission, 45.3% on distribution and 5.0% on telecommunications.

1. Enersis, a Chile-based holding company, engages in the generation, transmission and distribution of electric energy. The parent company of Grupo Enersis, it has its operations in Chile, Argentina, Brazil, Colombia and Peru.

Of the seven analysts covering the stock, 71% rate it a buy and the rest suggest a hold. There are no sell ratings on the stock. The stock's average 12-month price target is $23.40, which is 30.9% higher than the current price, as per a Bloomberg consensus.

For the third quarter of 2011, the company reported net profit of $319.02 million. Enersis recorded strong growth of 7.6% and 4.9% in electricity demand from its operations in Peru and Chile, respectively, for the January-September period. As of Sept. 30, the company recorded strong cash and cash equivalents of $1,797 million. Gross margin for the latest quarter was 43.01%.

The company's customer base for its distribution business expanded to almost 355,000 subscribers in the first nine months of 2011, indicating that organic growth was a major stabilizing factor for its cash flows. Enersis' total customers reached 13.5 million with a consumption increase of 1% per household. The distribution business recorded 3.3% growth in operating revenues. Meanwhile, in the generation and transmission business, consolidated physical sales rose 1.2% to 47,857 GWh.

>>To see these stocks in action, visit the 6 Utility Stocks to Light Up a Portfolio portfolio on Stockpickr.

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