Buy These Hard-Charging Utilities

01/25/2011 10:35 am EST


Richard Young

Editor, Young's Intelligence Report

Strong stock charts show these companies’ efficiency drives are paying off, writes Richard C. Young, editor of Intelligence Report.

Atmos Energy (NYSE: ATO)
At companies with large fixed-asset bases, including utilities like Atmos, the need to efficiently manage costs is vital. Atmos manages its employee count and expenses account so well that it is an industry leader in both categories. Atmos serves 678 customers per employee, outperforming the industry average of only 622. And Atmos spends only $116 per customer, compared to an industry average of $225. Atmos Energy is quickly returning to trend. Buy before it gets there. 

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NuStar Energy (NYSE: NS)
Every day, crude oil is pumped from Texas, Oklahoma, Colorado, and Kansas into pipelines owned by NuStar. Refineries in Sunray and Leroy, Texas, and Ardmore, Oklahoma, turn the crude into gasoline, diesel, jet fuel, petrochemicals, and other refined petroleum products and send it back out along NuStar-owned pipelines that distribute the refined products to the Midwest and mid-continent states. NuStar transports hundreds of thousands of barrels a day in this cycle. My rate-of-change chart shows a steady positive trend for NuStar's price as it has stabilized and begun to grow in the second half of 2010.

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Aqua America (NYSE: WTR)
Private water utilities own only about 16% of the nation's water supply infrastructure. That leaves 84% of the nation's waterworks in the hands of America's cities and towns. The long-term trend in the water utility business will be toward their privatization, and Aqua America will continue to grow through smart acquisitions of mismanaged utilities, both public and private. You can see Aqua America's strong upward trend since the middle of June. After its breakout over its November 2008 highs, the next point of resistance is near $25 a share.

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[Roger Conrad recently recommended an electric utility getting along fabulously with its regulators—Editor.]

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