Ahead of the Bell: Regulated utilities

Regulated utilities remain an attractive investment in a low-interest rate environment given expected net income growth of up to 9 percent, a Goldman Sachs analyst said Tuesday.

"Even without major positive catalysts, the regulated utilities have outperformed the (Standard & Poor's 500 index) by roughly (15 percent) since March 2008, an outperformance expected to continue into (the fourth quarter of 2008 and first quarter of 2009), analyst Michael Lapides said in a note to clients.

While there are few major sector-wide catalysts, there are many company-specific catalysts, including project approvals for large-scale transmission, environmental and renewable generation efforts, as well as rate cases and regulatory proceedings, Lapides said.

The lack of sector-wide catalysts means the regulated utility sector is for longer-term investors looking for above-average earnings growth, he said.

Meanwhile, Lapides downgraded PG&E Corp. to "Neutral" from "Buy" on valuation _ the stock is down about 4 percent so far this year.

He upgraded Westar Energy Inc. to "Buy" from "Neutral" and Consolidated Edison Inc. to "Neutral" from "Sell," citing valuation for both utilities.

Lapides kept a "Buy" rating on American Electric Power Co. and Cleco Corp., and a "Neutral" rating on Wisconsin Energy Corp. and Great Plains Energy Inc. He reiterated a "Sell" rating on Duke Energy Corp., Scana Corp., NStar and WGL Holdings Inc.