Market Overview

Atlas Energy and Other Utilities Stocks Worth a Look

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On Monday, Benzinga asked Should Traders Brace for a Rough Q2 Earnings Season? In a nutshell, the answer is yes. The coming earnings season could be the worst in more than three years. One of the ways investors are expected to prepare for the quarter is to turn to utilities, which are seen as less risky than some other stock investments. Furthermore, many utilities are currently paying out better than the yields of U.S. Treasuries.

Here is a quick look at a few utilities stocks that offer dividends and are trading at or more than 10 percent higher than they were six months ago.

American States Water (NYSE: AWR), a water and electricity supplier primarily in California, is pursuing military contracts. The stock hit a new multiyear high Tuesday after rising more than 9 percent in the past month. This San Dimas-based company has a market capitalization of more than $760 million and a dividend yield near 1.3 percent. The P/E and PEG ratios are less than the industry average. The long-term earnings per share (EPS) growth forecast of less than 8 percent, but the operating margin is higher than the industry average. However, the consensus price target is a little higher than the current share price. The stock has outperformed larger competitors American Water Works (NYSE: AWK) and California Water Service (NYSE: CWT) over the past six months.

Shares of Atlas Energy (NYSE: ATLS) sank in late May after reaching a multiyear high about a month earlier. The share price is now about the same as it was a month ago. This Pittsburgh-based natural gas producer has a market cap of about $1.6 billion. The long-term EPS growth forecast is more than 49 percent, and the forward earnings multiple is about 10.4. The consensus price target on the stock is more than 35 percent higher than the current share price, meaning analysts feel the stock has plenty of room to run. The dividend yield is about 3.2 percent. Over the past six months, the stock has outperformed Kinder Morgan (NYSE: KMP), as well as the Dow Jones Industrial Average.

Albuquerque-based PNM Resources (NYSE: PNM) is a diversified utility. After being range-bound mostly between $17 and $19 since October 2011, shares have broken higher and hit a new multiyear high last week. PNM's market cap is now about $1.6 billion and its dividend yield is near 2.9 percent. The P/E and PEG ratios are lower than the industry average and the operating margin is higher than the industry average. Note though that the share price has almost caught up to the consensus price target of analysts. The stock has outperformed competitor El Paso Electric (NYSE: EE) and the broader markets over the past six months.

Shares of Tucson-based UNS Energy (NYSE: UNS) have marched higher since April despite a weak first-quarter report. The stock now trades near a 52-week high and the share price is about 10 percent higher than six months ago. The market cap of this electric utility is nearly $1.5 billion and current dividend yield is more than 4 percent. The P/E ratio is less than the industry average and operating margins are higher than the industry average. Also, note that CEO Paul Bonavia bought 2,000 shares of UNS in late April. Over the past six months, the stock has outperformed the Dow Jones Industrial Average.

Posted-In: American States Water American water works atlas energy california water service El Paso ElectricLong Ideas Short Ideas Trading Ideas

 

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