However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
Among the more than 119 stocks listed under utilities in the CAPS' screener, we've unearthed more than a few with high five-star ratings. Those accolades mean our 140,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the five below:
|
Company
|
CAPS Rating Today
|
Recent Price
|
52-Week Price Change
|
Est. LT Growth Rate
|
|
Cascal (NYSE: HOO )
|
*****
|
$5.48
|
(13%)
|
NA
|
|
China Natural Gas (Nasdaq: CHNG )
|
*****
|
$12.75
|
93%
|
NA
|
|
Consolidated Edison (NYSE: ED )
|
*****
|
$40.88
|
(3%)
|
3%
|
|
FPL Group (NYSE: FPL )
|
*****
|
$49.21
|
5%
|
9%
|
|
Southern (NYSE: SO )
|
****
|
$30.99
|
(11%)
|
5%
|
Source: Motley Fool CAPS; Yahoo! Finance.
While some companies in the utilities sector have obviously fared better than others -- A-Power Energy (Nasdaq: APWR ) and Empresa have doubled or more -- the average utility stock is also powering up with returns of 9% from the year-ago period. So let's take a closer look at why investors think that some of these companies won't be jumping from the frying pan into the fire from the market's lofty heights.
Some spring in its step
While the price of natural gas may be depressed these days as inventories reach record levels, that doesn't mean stocks of industry players are. The average company in CAPS Natural Gas sector has risen almost 20% over the past year, but that pales in comparison to China Natural Gas, which has nearly doubled. More recently, the energy specialist has inflated investor confidence with an announcement of expansion plans.
A recent offering to raise $50 million will see the proceeds used for construction of a liquefied natural gas facility, the acquisition of eight CNG fueling stations, the purchase of eight CNG trucks to transport the gas, and the establishment of a joint venture company. It looks like the company is making a big bet on its future.
CAPS member ValueInvestor1 finds China Natural Gas's toll-road business model to be an attractive feature:
- Gas pipelines have a sustainable competitive advantage from basically being monopolies for the geographies that they cover.
- Stock is undervalued relative to its growth prospects.
- Natural gas demand is growing rapidly in China.
Hoo you talkin' 'bout?
Water, water everywhere ... and converting it from waste into something you can drink is what Cascal does best. With operations in the United Kingdom, South Africa, Indonesia, China, Chile, Panama, Mexico, and the Philippines, Cascal would seem to be a play on growing global infrastructure projects. Governments in these countries need to continuously upgrade their living standards, and expanding the availability of potable water would be one way to go about it.
Yet I find such infrastructure plays to be incredibly slow moving and subject to the political vagaries and budgetary concerns present everywhere around the globe. More than half of Cascal's revenues come from emerging markets meaning these governments need to make judicious allocations with scarce resources. Even in a rich country like the U.S. where the American Society of Civil Engineers has given its water infrastructure a "D" grade, investment in upgrades has come at a glacial pace, and companies like Mueller Water (NYSE: MWA ) trade at a third of the price they did three years ago when the grade was given.
Cascal is not a heavily followed company, on Wall Street or on CAPS, but 97% of the 117 members who have rated the water works believe it will outperform the broader market. A slightly greater percentage of the All-Star members rating it think so as well. Why not head over to Cascal's CAPS page now and open the spigot of opinion. Or let us know in the comments section below if this stock is just water under the bridge.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.
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