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I like utility companies. They make great hunting ground for value investors looking for yield and stability in uncertain times. Investors can not only receive dividend yields of 4-5% but are also exposed to below-average business risk as demand for electricity is more or less stable and even slightly growing. Duke Energy (NYSE:DUK) and Exelon (NYSE:EXC) are investors' darlings based on business performance and dividends.

However, there are a couple of equally interesting U.S.-listed utility businesses that seem to attract less investor interest, yet are also decent dividend payers and have consistent EPS growth trends. These companies are: Southern Company (NYSE:SO), American Electric Power (NYSE:AEP) and Consolidated Edison (NYSE:ED). This article should give investors an overview of less covered U.S. utility companies which are also worthy of a closer look.

Southern Company is an energy company involved in the generation, transmission, and distribution of electricity through coal, nuclear, oil and gas, and hydro resources. Southern has a market capitalization of $42 billion and is a S&P constituent.

I like Southern Company because of its above-average return on equity of 12.6% and high profit margin of 13%. The company has increased its EPS by over 8% this year and is expected to grow earnings at an average annual rate of 5.04% over the next five years.

Given the multiple energy sources available to the company, Southern has a strong product portfolio. SO trades at a multiple of 17x forward earnings and has a very healthy dividend yield of 4.1%. Given its high dividend yield, yet low risk profile, Southern has still room to grow its valuation.

American Electric Power generates, transmits and distributes electric power in the U.S. Energy sources are coal, lignite, natural gas, nuclear energy and hydroelectric energy. The company is also a S&P 500 constituent and has a market capitalization of $20 billion.

AEP has both a return on equity and profit margin of 11%. Its valuation is with 13x earnings significantly lower than Southern's. AEP might be interesting for investors who desire exposure to smaller capitalization stocks compared to Southern.

American Electric Power has increased EPS over 28% this year and analysts expect the company to grow its earnings at an average annual rate of 3.6% over the next 5 years. Analysts estimate AEP to earn $3.13 per share in 2013. With a conservative multiple of 15, the intrinsic value is $46.95, giving the stock about 12% upside potential.

The last stock in this series of under-appreciated utility stocks is Consolidated Edison, an energy company which provides electric services to roughly 3.3 million customers in New York City and Westchester County.

EPS has increased 3% y-o-y and is expected to increase annually by 3.5% over the next 5 years. Consistent earnings growth is particularly attractive when economic uncertainty continues to persist and the earnings picture of businesses remains weak on average. Investors in utilities such as Consolidated Edison can mitigate earnings risk through the purchase of a company with consistent EPS growth.

ED trades at 16.5x times earnings and has an earnings yield of 6%. The company is less profitable with a return on equity of 9% than Southern and American Electric Power, but still offers a respectable 3.8% dividend yield. Based on earnings growth prospects, low capital costs and attractive position in the Northeastern U.S., I still consider the price of ED stock and the reward/risk ratio attractive.

In addition, Consolidated Edison has entered a steeper upward trend canal which the stock has consistently followed and re-affirmed. The stock sits now just below the upper bound of the trend canal. If ED can surpass the $64 mark, the stock price could be driven even higher as chart-traders get attracted to increased momentum.

Source: 3 Undervalued Alternatives To Duke Energy And Exelon