A utility stock is often a good investment because of the moat and the potential for dividends, but these stocks also respond inversely to the economy. Utilities may do good business, but as the market rises they tend to get left behind when investors get confident and seek more adventurous waters. Now is a good time to check under the hood and get ready for when a great deal presents itself. Let’s see how a few particular power utility companies stack up.
Good deals exist
IDACORP Inc (NYSE:IDA) is the parent of three subsidiaries that produce power primarily through hydroelectricity and thermal plants. Green business is the way to go in the 21st century, and this is a company that’s riding that wave nicely.
The company formed as IDACORP Inc (NYSE:IDA) purchased several smaller Idaho-based power companies, and there’s no reason the trend of acquisitions has to end. This is particularly possible because IDACORP Inc (NYSE:IDA) is rocking a 16.1% trailing profit margin, so there’s ready cash available for new purchases on the generation and transmission side of things.
Interestingly enough, I also think IDACORP Inc (NYSE:IDA) is a decent deal at this point. While the earnings multiple isn’t everything, the fact that the company is trading beneath the S&P 500 average at around 14 times earnings is significant. Also, the 3.1% dividend yield also indicates that this is a diamond in the rough. Pair those with a 1.4 book multiple, and you’ve got the makings of a solid deal. I recommend you check out IDACORP Inc (NYSE:IDA) for yourself.
Worth the price
NextEra Energy, Inc. (NYSE:NEE) is a Fortune 200 company that operates all over the US and somewhat in Canada. While some people see only currency woes working in two countries, I see the opportunity to take advantage of positive exchange rates and not one but two of the world’s sturdiest economies.
While I’m a fan of the huge, primarily green power-production capacity and diverse markets NextEra Energy, Inc. (NYSE:NEE) has through its subsidiaries, I really like FPL FiberNet. Since fiber optic communication is vital today and will become even more so as we settle further into the information age, this presents a huge and only partially tapped potential for growth.
NextEra Energy, Inc. (NYSE:NEE) carries a 12.2% trailing profit margin, which gives the company plenty of money to invest into bigger and better infrastructure. And I can’t lie, the 3.3% dividend yield is also pretty sweet.