Saturday, December 06, 2008

Stocks Which Benefit from Low Oil Prices Part 2: Utilities

Oil may break through $40 a barrel, since it is skirting very close to that price and has traded as low as $40.81. Recently, I wrote about the trucking and package delivery stocks which could benefit from lower gasoline prices.

With the price of oil and natural gas tanking, investors are now looking closely at the utility stocks that use oil and gas as a major fuel source of their electrical generation. Hopefully, the cost savings for these companies will pass through to the bottom line long before the Utilities Commissions implement rate reductions.

Pinnacle West Capital Corp. (PNW) has one of the heaviest exposures, with 24% of their electric energy coming from oil and natural gas. About 35% comes from coal and 21.5% from nuclear. This Phoenix, Arizona based company has a PE of 11, a PEG of 2.62 and a yield of 7.2%.

Westar Energy Inc. (WR) generates about 34% of its energy from natural gas, with 56% from coal and 9% from nuclear. This utility which serves Kansas has a PE of 12, a PEG of 3.11 and a yield of 6.2%.

Entergy Corp. (ETR) has about 18% of its fuel sources coming from oil and natural gas. 12% is from coal and 33% from nuclear, with the rest purchased. Entergy serves Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans, where it is based. The stock has a PE of 13, a PEG of 1.17 and a yield of 3.7%.

OGE Energy Corp. (OGE) has 29% of its energy coming from natural gas, with 51% from coal. They serve the south central United States. The stock has a PE of 9, a PEG of 2.32 and a yield of 6%.

Alliant Energy Corp. (LNT) has 28% of its electricity generated from natural gas and 6% from oil. The company serves Iowa and southern Minnesota. The stock has a PE of 8, a PEG of 1.78 and a yield of 4.9%.

Cleco Corp. (CNL), another Louisiana based company, with 14% exposure to natural gas. The stock has a PE of 13, a PEG of 0.99 and a yield of 4.2%.

If you like utility stocks, you should take a look at Highest Yielding Electric Utilities and Highest Yielding Natural Gas Utilities. You can also find an Excel database of utility stocks, which you can download, add to and sort, at

Author does not own any of the above.

By Fred Fuld at


RKO said...

It would be useful to know the growth period on which the PEG ratios in this blog are calculated.

Stockerblog said...

PEG is based on five year expected earnings.