Opponents
American Electric Power Company, Inc. (NYSE:AEP) reported its earnings recently. It is currently valued at $22.4 billion and carries a price-to-earnings ratio of about 15.5. The reported sales were better than expected and profits were in line with the consensus estimates. It currently increased its dividend pay-out by 4.3% to $0.49 a share. The company’s geographic reach spans across 11 states from West Virginia to Texas.
Although the stock has a beta of 0.6, which displays its steadiness, the main problem lies in the fact that the company generates 66% of its power from coal which can be a reason of long-term worries once people start moving towards clean energy. Hence the company has plans of investing $3.6 billion in 2013 to diversify its operations. Looking at all these uncertainties, I would suggest to refrain oneself from this stock at the moment.
PPL Corporation (NYSE:PPL) is another utility company which reported its earnings lately. It reported its EPS at $0.71 a share, compared to $0.70, 1.4% higher from a year ago period. It has made quite a few acquisitions last year and will be investing around $1 billion in upgrading its transmission and distribution systems. This upgrade will power 1.42 million consumers with uninterrupted supply of power.
Investors are advised to hold on to the stock currently as the company is priced near its 52-week high and has consistently increased its pay-out in the last 12 years, showing a positive sign for investment.
Duke Energy Corp (NYSE:DUK) surpassed sales expectations but bottomed out on bottom-line earnings. It is valued at $48.9 billion, pays out a dividend yielding 4.4%, and carries a price-to-earnings ratio of 22.6. Owing to its steady business model, the stock possesses a beta ratio of 0.3 only. In the fourth quarter of 2012, the company possessed a profit margin of 7.6%.
Tracking the signs of synergies from the utility’s July 2012 Progress Energy merger, investors were watching this quarter’s results closely. First quarter sales signal that the partnership has proved effective. Thus from an operational standpoint, Duke Energy Corp (NYSE:DUK)’s merger moves remain on track.
Bottom line
Fighting the energy crunches, as the world moves progressively towards clean energy sources, Exelon Corporation (NYSE:EXC) looks perfectly positioned with a diversified portfolio in the energy market. Investors do need to keep a close watch on each utility’s performance and energy portfolio offerings. Recent spikes in natural gas prices may seem potentially lucrative, but the best investments are those that provide sustainable profits through thick and thin.
The company has good price appreciation potential. The combination of natural and nuclear energy in its portfolio helps Exelon in lowering risk thereby achieving stability. Its recent trading activity and upcoming plans should result in better margins and higher profits for long-term investors. Thus I recommend a buy at the current price, not just for a healthy profit, but also for a healthy environment in the future.
The article Go Green and get Rich! originally appeared on Fool.com.
Rishabh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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