3 Utility Ideas From Mario Gabelli: The AES Corporation (AES), American Electric Power Company, Inc. (AEP) & More

El Paso Electric Company (NYSE:EE)

El Paso Electric is perhaps the most boring of the utilities highlighted here. While it doesn’t do anything super fancy or have operations in foreign markets, it does supply power to important and growing U.S. markets. Its key markets are El Paso, Texas and Las Cruces, New Mexico. Gabelli is expecting customer growth of between one and two percent and sales growth of two to three percent. That’s higher than the 1% growth he sees as the U.S. average in the coming years.

A big factor behind this growth should be “military base expansion and customer immigration as well as an increased use of refrigerated air conditioning.” The manager highlights the fact that the population at Fort Bliss has more than tripled over the last seven years and is now being considered for a new role as an Air Force training center. That would likely mean additional staffing and increased electric demand.

Immigration, meanwhile, while a contentious issue politically, allowed the company’s customer base to grow 0.5 basis points faster than the national average over the past decade, a meaningful difference. Also notable, Gabelli reports that “only 35% of El Paso residences have refrigerated air conditioning, but 99% of new residences install central air conditioning. As a result, EE is one of the few electric utilities experiencing meaningful usage-per-customer growth.”

While El Paso is just a run of the mill utility, it is one with strong fundamentals and the wind at its back.

Utilities
Investing in utilities isn’t “sexy,” but these stocks can provide a solid foundation to a portfolio. While there are plenty of average utilities around, finding ones with unique profiles can provide more meaningful growth over the long term. The above companies possess the types of characteristics that should interest investors.

The article 3 Utility Ideas From Mario Gabelli originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.