Looking for a hot investing idea? Try the most boring industry imaginable: utilities.
At least that's according to David Parker, star analyst at Baird, quoted by the AP.
According to Parker, shares of power companies appear to be attractive investments this year as the industry invests in new power plants and other infrastructure projects to meet new environmental standards.
Parker estimates the industry will spend $750 billion over the next decade to maintain the electrical grid, meet stronger environmental standards, and satisfy expanding or changing customer needs.
Business section: Investing ideas
Looking for ways to get an exposure to this trend?
To help you get started, we analyzed profitability data on 170 utility companies and identified a list of 10 that have proven themselves to be more profitable than their competitors, based on gross and net profit margins.
These utility stocks have a track record of being more profitable than their competitors - -does that make their 2012 outlook more stable?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. Southern Company
2. Dominion Resources: Engages in producing and transporting energy in the United States. TTM gross margin at 30.32% vs. industry average at 27.04%. TTM operating margin at 23.32% vs. industry average at 18.03%. TTM pre-tax margin at 16.77% vs. industry average at 13.23%.
3. Duke Energy
4. Exelon
5. American Electric Power: Engages in the generation, transmission, and distribution of electric power to retail customers. TTM gross margin at 31.27% vs. industry average at 27.05%. TTM operating margin at 20.26% vs. industry average at 18.34%. TTM pre-tax margin at 16.17% vs. industry average at 13.86%.
6. PPL
7. Public Service Enterprise Group
8. Enersis: Engages in the generation, transmission, and distribution of electricity in Chile, Argentina, Brazil, Colombia, and Peru. TTM gross margin at 30.49% vs. industry average at 27.05%. TTM operating margin at 24.23% vs. industry average at 18.34%. TTM pre-tax margin at 21.16% vs. industry average at 13.86%.
9. Companhia Paranaense de Energia: Engages in the generation, transmission, distribution, and sale of electricity for industrial, residential, commercial, and rural customers primarily in the State of Parana, Brazil. TTM gross margin at 31.72% vs. industry average at 26.95%. TTM operating margin at 24.03% vs. industry average at 18.26%. TTM pre-tax margin at 21.59% vs. industry average at 13.97%.
10. Pinnacle West Capital: Provides retail and wholesale electric services primarily in the State of Arizona. TTM gross margin at 35.41% vs. industry average at 27.05%. TTM operating margin at 22.32% vs. industry average at 18.34%. TTM pre-tax margin at 15.99% vs. industry average at 13.86%
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen does not own any of the shares mentioned above.