NextEra Energy

01/09/2015 7:00 am EST


David Dittman

Chief Investment Strategist, Australian Edge, Canadian Edge, & Utility Forecaster

Our Top Pick for 2015 features a compelling combination of attractive investment opportunities and strong cash flow from existing assets, suggests David Dittman, editor of Utility Forecaster.

Among the assets owned and operated by NextEra Energy (NEE) are its Florida Power & Light regulated utility.

In addition, its NextEra Energy Resources unit is on track to meet or exceed wind and solar contracted capacity targets for 2013 to 2015 and 2013 to 2016, respectively.

And it plans to accelerate drop-downs to its NextEra Energy Partners LP (NEP) affiliate to maximize its incentive distribution rights (IDR) by late 2015.

It’s likely that the outcome of the recent mid-term Congressional elections will lead to a slowdown in the wind market in 2016-17 due to tax credit expirations and the pulling forward of projects.

However, the industry’s long-term fundamentals are intact, along with improving technology. And NextEra Energy Resources has other infrastructure investment opportunities that should bridge a potential gap.

Management affirmed 2014 adjusted EPS guidance of $5.15 to $5.35 and established a preliminary 2015 forecast of $5.40 to $5.70. And it expects to see 5% to 7% annual adjusted EPS growth from a 2014 base through 2018.

Its ownership stake in NextEra Energy Partners is a key growth driver. Its leading position in the renewable energy space is another positive.

And its FPL unit is a strong franchise, benefitting from a favorable regulatory climate, strong demographics, and solid economic fundamentals. For these reasons, we’re raising our buy-under target on the stock. NextEra Energy is a buy under $108.

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