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Jul.09
2:28 PM ET
Monday, 9 Jul 2007
Utility Analysts Look at Powering Up Your Portfolio

With heat gripping much of the nation, "Morning Call" chatted with two utility experts about how to make some cool cash off of recent trends for power companies.

“We think investors should be looking at generation companies such as NRG Energy [NRG  Loading...      ()   ], Public Service Enterprise [PEG  Loading...      ()   ] and Constellation Energy [CEG  Loading...      ()   ],” suggested Paul Fremont, managing director at Jefferies. “Those companies are long generation, and they have unregulated power plants, and periods of hot weather could provide for very significant spikes in power prices.”

But Paul Justice, an analyst at Morningstar, takes a different stance. He prefers stocks with regulation exposure.

“If you want to focus on investing in utilities, you can do well by buying a few different utility stocks on your own that are centered on regulated operation and also located in high population density areas,” said Justice. “Those are the opportunities where we see substantial amount of infrastructure that's going to be built and you will see earnings and dividend growth.”

Examples? Justice likes PG&E [PCG  Loading...      ()   ] and ConEd [ED  Loading...      ()   ] because “they have great dividend yields and they have the opportunity to play a lot of capital into infrastructure investments that include transmission and distribution."

© 2009 CNBC.com

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