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Energy Stocks to Light Up Your Life
04/24/2007 12:00 am EST
Louis Navellier, chairman of Navellier Associates and editor of Blue Chip Growth, recommends four new energy providers and electric utilities that should benefit from efforts to develop alternative energy.
Allegheny Energy (NYSE: AYE) delivers electricity to over 1.5 million customers in Pennsylvania, West Virginia, Maryland and Virginia. It owns or controls 10,196 megawatts (MW) of low-cost generation. One megawatt is enough electricity to supply about 1,000 homes. Within the last year, AYE generated over $3 billion in annual revenues.
AYE posted an impressive 13% earnings surprise in the past four quarters, causing analysts to revise their estimates higher in the past three months. Usually, such aggressive revisions precede earnings surprises. The stock has been appreciating and is a great buy below $57. (The shares traded just shy of $54 Tuesday—Editor.)
Constellation Energy (NYSE:CEG) is the nation's largest competitive supplier of electricity. Based in Baltimore, CEG also delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland.
CEG announced 2006 revenues of $19.3 billion and posted more than 21% earnings growth in the past three quarters. (It reports first-quarter earnings Wednesday, April 25.) Citigroup boosted its 12-month price target for CEG earlier this month, and forecasts earnings of $6.40 a share in fiscal 2009 from $4.60 in fiscal 2007. Constellation's 1.9% dividend isn't bad, either. Buy CEG below $96. (It changed hands around $92 Tuesday—Editor.)
FPL Group (NYSE:FPL) is one of the country's premier power companies. With a growing presence in 26 states, the company's wholesale subsidiary, FPL Energy, is a leader in producing electricity from clean and renewable fuels.
Another subsidiary, Florida Power & Light Company, supplies power to more than 4.3 million customers in Florida. Although gas is its primary fuel, FPL Energy is the nation's largest developer, owner and operator of wind-powered generating plants. Improved technology and ever-increasing fuel costs have led energy providers across the nation to focus more on wind-powered generating plants.
FPL has a solid history of earnings surprises, and the company posted 38.6% earnings growth in the past four quarters. Plus, it offers a nice 2% dividend for income-conscious investors. This stock is another bright energy play, below $67. (It sold at around $64 Tuesday—Editor.)
Mirant (NYSE: MIR) generates revenue primarily through the production of electricity in the US, the Philippines, and the Caribbean. Recently, it announced that it is considering some changes. This is the latest chapter in Mirant's quest to restructure after emerging from bankruptcy in early 2006.
Mirant may give excess cash back to stockholders, enter into a deal with another company or sell itself entirely. Analysts have revised their quarterly earnings estimates 43.4% higher in the past three months, [but] Mirant is trading at only 7.2x trailing earnings. The stock is a great buy below $49. (It was under $46 Tuesday—Editor.)
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