5-Star Stocks Poised to Pop: NextEra Energy

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electricity giant NextEra Energy (NYSE: NEE  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at NextEra's business and see what CAPS investors are saying about the stock right now.

NextEra facts

Headquarters (Founded)

Juno Beach, Fla. (1984)

Market Cap

$22.4 billion

Industry

Electric utilities

Trailing-12-Month Revenue

$15.2 billion

Management

CEO Lewis Hay III (since 2001)

CFO Armando Pimentel Jr. (since 2008)

Return on Equity (Average, Past 3 Years)

14.7%

Cash/Debt

$298 million / $21.6 billion

Dividend Yield

4.2%

Competitors

Progress Energy (NYSE: PGN  )

Southern (NYSE: SO  )

Exelon (NYSE: EXC  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 1,101 members who have rated NextEra believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars concealedweaponR and InvestWhatWorks.

This past summer, concealedweaponR said that NextEra "impresses me because they are set as a current money generator and also set up to make head way in future cleaner energy."

NextEra even sports a cheapish forward P/E of 11.2. That represents a discount to industry peers like Progress (15.8), Southern (15.5), and Exelon (13.8).

CAPS All-Star InvestWhatWorks elaborates on the bull case:

As well as building new plants, they are also modernizing their older plants to make them more efficient and to increase power generating capacity (without increasing emissions).

In addition, NextEra Energy is continuing to expand their presence in wind energy and solar energy. It was recently revealed (in August of 2011) that NextEra is partnering with General Electric to acquire the Desert Sunlight Solar Farm, a 550-megawatt project located near Palm Springs, California.

If the US government and the EPA does force the closure of some coal power plants, NextEra is in a great position with their very lower exposure to coal. If the EPA relaxes their rules, NextEra Energy, with its growth potential and over 4% dividend (at the time of this post), is still a great stock to own.

What do you think about NextEra, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track NextEra? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool has written puts on NextEra. Motley Fool newsletter services have recommended buying shares of Exelon and Southern; and writing a covered strangle position on Exelon. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 05, 2011, at 3:12 PM, shammoo wrote:

    Too dependent on government subsidies to make things work. Being the largest wind producer doesn't point to a bright future. Some people perceive that management has really made some bad decisions that will come back to haunt Next Era.

  • Report this Comment On October 06, 2011, at 11:43 PM, MHedgeFundTrader wrote:

    I wanted to get the low down on clean coal to see how clean it really is, so I visited some friends at Lawrence Livermore National Laboratory. The modern day descendent of the Atomic Energy Commission, where I had a student job in the seventies, the leading researcher on laser induced nuclear fission, and the administrator of our atomic weapons stockpile, I figured they’d know.

    Dirty coal currently supplies us with 50% of our electricity, and total electricity demand is expected to go up 30% by 2030. The industry is spewing out 32 billion tons of carbon dioxide (CO2) a year and the great majority of independent scientists out there believe that the global warming it is causing will lead us to an environmental disaster within decades.

    Carbon Capture and Storage technology (CCS) locks up these emissions deep underground forever. The problem is that there is only one of these plants in operation in North Dakota, a legacy of the Carter administration, and new ones would cost $4 billion each. The low estimate to replace the 250 existing coal plants in the US is $1 trillion, and this will produce electricity that costs 50% more than we now pay. In a budget constrained congress, this is a bi ticket that is unlikely to get picked up.

    While we can build a wall to keep out illegal immigrants from Latin America, it won’t keep out CO2. This is a big problem as China is currently completing one new coal fired plant a week. In fact, the Middle Kingdom is rushing to perfect cheaper CCS technologies, not only for their own use, but also to sell to us. The bottom line is coal can be cleaned, but at a frightful price.

  • Report this Comment On October 12, 2011, at 7:32 PM, InvestWhatWorks wrote:

    Now that my NextEra Energy CAPS pitch has been quoted in an Motley Fool article, I really regret not grammar checking it better.

    "Very lower"?

    *smacks forehead*

    That's a good lesson for everybody. Always check your grammar. You never know when a Motley Fool writer/analyst will quote you in an article. Haha.

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