Friday, September 3, 2010

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Archive for the ‘Utilities’ Category

Aqua America: A Safe Way to Tap the Water Sector

Posted by admin On September - 2 - 2010

Dr. Stephen Leeb submits:

With the economic recovery flagging, buyers have been hesitant to jump full force into the market. But while the S&P 500 remains underwater for the year, even with today’s rally, some more conservative stocks like utilities are coming back into favor. Case in point is Income Portfolio’s Aqua America (WTR), one of the largest publicly traded water utilities. Based in Pennsylvania, Aqua America has seen its shares outperform the market by 20 percentage points this year as they’ve reached levels last seen in April 2009.
Given the company’s recent earnings report, it’s not too hard to see why, either. The company collected $178.4 million in revenues during the second quarter, a 6.6 percent increase over the same period in the prior year. With effective cost controls, the company’s net income jumped over 15 percent year-over-year to $29.9 million. The company’s revenue stream has been helped by favorable rate decisions in many of its main states of operations, including Pennsylvania which accounts for roughly half of Aqua’s business. In addition, the company has been awarded surcharges to help cover various infrastructure investments made to improve their network reliability as well as comply with environmental requirements. All told, the already-awarded increases will add $43.7 million in annual revenues to the company’s top line (the company collected $670 million in revenues in full-year 2009). There are also almost $14 million in additional rate cases pending before four other state regulators.

The company is aggressively pursuing other infrastructure projects. Aqua America had invested over $140 million in improvements in the first half of 2010 and is on track to spend more than $300 million for the full year in efforts of further reliability and service improvement. Among the company’s projects has been solar. Already boasting a 1 megawatt solar farm, Aqua is looking at opening at 1.5 MW solar farm in Pennsylvania, adjacent to the company’s largest water treatment facility, to reduce power purchased for use at the facility.
The company’s balance sheet remains in fine shape, and management was able to successfully tap the capital markets for $70 million (via senior notes at less than 5 percent) for additional funding. With operations humming, management also increased the company’s quarterly dividend by seven percent to 15.5 cents, for a yield above 3 percent.
Shares are not overly cheap at 20 times forward earnings, but we view them as a safer way to tap the water sector. Along with other utilities, Aqua America shares could see further interest in the market as the economy at large continues to struggle in its recovery, and investors opt for companies with more consistent demand.

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From Nukes to Wind: Exelon Is Excellent

Posted by admin On September - 1 - 2010

Ed Leventhal submits:

As reported earlier on SeekingAlpha.com:

Tuesday, August 31, 7:31 AM Exelon (EXC) agrees to buy Deere’s (DE) wind energy business in a deal worth a total of $900M. "Not only does this acquisition add value for Exelon shareholders, providing incremental earnings in 2012 and cash flows in 2013, but it also is one more way to implement a clean energy future." (PR)

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Chuck Carnevale submits:

Bonds are Historically Expensive

I am stating the obvious when I say that there is a current aversion to US equities by the vast majority of investors. As a result, money is pouring in to bonds and bond funds. With interest rates hovering at all-time lows, we believe that the normal low risk profile of fixed income is potentially upside down today. In other words, we believe that bonds, especially bonds with longer duration, are as risky as they can ever get.

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Constellation Energy Will Keep the Lights On

Posted by admin On August - 26 - 2010

SL Advisors submits:

Constellation Energy (CEG) has fallen more than 20% since April, and in the last month its relative underperformance versus the S&P500 has accelerated. Their business takes some time to understand; it consists of a regulated utility (Baltimore Gas & Electric); a power generation business (Generation) and an energy supply business (NewEnergy). Last year they sold a 49.99% stake in their subsidiary Constellation Nuclear Energy Group, LLC (CENG) to EDF Group, allowing them to remove CENG’s assets and liabilities from their balance sheet and record a gain on the sale.

More recently, their 2Q10 earnings call revealed margin pressure on their NewEnergy business which provides power to commercial customers. They also announced they were bidding $1.1 billion for Boston Generating, an unpopular move given the Boston utility’s inability to turn a profit for several previous owners. These two issues account for why some analysts have soured on the stock. CEG may suffer as previous owners have, although if the deal goes through they’ll own the assets at a cheaper price than any of the recent owners. They also have lots of cash which they’ve retained pending the implementation of FinReg since increased collateral for the energy derivatives they use to hedge is possible.

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Top 10 Dividend Yielding U.S. Utilities

Posted by admin On August - 24 - 2010

YCHARTS.com submits:

We have comprised a list of the top ten dividend yielding US utilities with market caps of at least $4.0 billion. They include Electric, Natural Gas and Diversified Utilities ranging in size from $4.5 billion in market cap to over $20 billion. The lowest dividend yield listed is 4.97% from the mammoth utility, Southern Company (SO). While the highest yield is 6.14% from First Energy (FE) soon to be First Energy and Allegheny Energy (AYE) combined as their merger announcement in February informed the world. With a soon to be $14 billion plus market capitalization the combined utility will be one of the largest in the US..

The return on equity (ROE) for these companies is solid with an average of 9.7% (one is below 3%). ROE for the industry has trended downward since summer of 2008 along with the cost of fuel and states unwillingness to pass on increases in current economy. However their dividends have moved in the opposite direction. Some believe that there may be a significant amount of trapped value in high quality utilities today. From a risk reward stand point many argue that high dividend yielding utilities are a good place to put cash.

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UGI Dividend Stock Analysis

Posted by admin On August - 23 - 2010

Dividends4Life submits:

Linked here is a detailed quantitative analysis of UGI Corporation (UGI) [pdf file]. Below are some highlights from the above linked analysis.


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COPEL: Earnings Scorecard

Posted by admin On August - 22 - 2010

Zacks.com submits:

Companhia Paranaense de Energia (ELP), also known as COPEL reported quite disappointing results for the second quarter of 2010. Higher costs eroded the modest increase in revenue leading to a 53.2% dip in the company’s net income. Weaker results also dimmed the growth prospects for the quarters ahead, despite the company being well-positioned to benefit from the growing electricity demand in Brazil.

Earnings Review

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Consolidated Edison: Dividend Stock Analysis for 2010

Posted by admin On August - 17 - 2010

Dividend Monk submits:

Summary

  • Consolidated Edison (ED) has a long history of dividend increases, a high dividend yield, and a reliable cash-generating business.
  • Revenue growth has averaged 6% pear year over these past five years but under 4% over the past decade.
  • Earnings growth and cash flow growth have averaged 9% and 13%, per year, respectively, over these past five years. But this is not an accurate view of the growth of the company, as earnings and cash flow have been somewhat irregular. In addition, with shares being issued, EPS has grown at a slower pace.
  • The dividend yield is currently 5% with a 70% payout ratio, and the dividend growth is approximately 1% per year on average.
  • Overall, this might be a useful stock choice for those desiring current dividend income.

Overview

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The Oxen Group submits:

Profile: Companhia de Saneamento Basico do Estado de Sao Paulo (Basic Sanitation Company of Sao Paulo – SBS) is the state of Sao Paulo’s environmental sanitation service company in Brazil’s financial capital. The company operates water, sewage,a nd industrial waste treatment facilities. Founded in 1954, the company has grown with the Sao Paulo state of Brazil. The company operates in 366 municipalities, treats sewage for 26 million people, and also handles rainwater drainage and management.

Thesis

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Will PG&E Run Out of Gas at Resistance?

Posted by admin On August - 9 - 2010

optionMONSTER submits:

By Chris McKhann

Shares of PG&E (PCG) have climbed to their highest level since 2007, but option traders are calling for a top.
PCG Chart

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