In past reports we have suggested that with the repeal of the PUHCA [Public Utility Holding Company Act] laws there was likely going to be consolidation among utility companies to gain the critical mass necessary to accomplish what is needed. This consolidation theme has already benefited our investment accounts with names like TXU Corp.'s (TXU) recently proposed buyout. Yet this consolidation theme still makes sense for investors. Names for your consideration that are rated Outperform by our research correspondent include: Constellation Energy (CEG), DPL Inc. (DPL), Edison International (EIX), Potomac Electric Power Company (POM)...
As for the utilities' infrastructure investments, over the past six years we have recommended many names that play to the reconstitution of the electric complex. While we have "cooled" on names like ABB Ltd. (ABB), given its rally from $2/share to $20, as well as ITC (ITC) on its rally since our recommendation, there are other names worthy of consideration. Again, Outperformed-rated names from our research correspondents include: AES Corporation (AES), Cooper Industries (CBE), and Shaw Group (SGR). And from Raymond James' research universe, Houston Wire & Cable (HWCC) is interesting. Coincidentally, SPDR State Street Global Advisors recently penned a "Point of View" report titled "Infrastructure: The Next Big Emerging Asset Class" that is highly suggested reading.
CEG vs POM vs EIX vs DPL 1-year Chart
AES vs HWCC vs SGR vs CBE 1-year Chart