Friday, June 29, 2012
Oil Has Dropped, Utilities Should Benefit
Investors could benefit from investing in utility stocks that use oil and gas to generate electricity, since the cost savings for these companies should pass through to the bottom line. According to WallStreetNewsNetwork.com, there are over 20 electric utilities with yields above 4%. Many of these companies use fossil fuels as a significant source of fuel to generate electricity, and could be the recipient of these lower prices.
For example, Pinnacle West Capital Corp. (PNW) has some fossil fuel exposures, with approximately 21% of its non-purchased electric energy coming from oil and natural gas, with the balance from coal and nuclear. This Phoenix, Arizona based electric utility trades at 16 times earnings and provides a generous yield of 4.1%. The company reports its latest earnings on August 1.
Southern Company (SO) is another utility that generates electricity from oil and gas, along with coal, nuclear, and hydro. Southern has a price to earnings ratio of 19 and pays a very decent yield of 4.2%. The company reports earnings on July 24.
For a free list of utility stocks, which you can download, update and sort, go to WallStreetNewsNetwork.com
Disclosure: Author did not own any of the above at the time the article was written.