Five Utility Bulls For August 20

Laclede a Value Leader
The Laclede Group has seen its share price increase steadily over the past month, gaining almost $10 from its three month low of about $38 on July 21. Laclede released quarterly earnings on July 31, and it reported a strong third quarter, and declared a dividend. Diluted earnings per share were increased in Q3 2008 to 41 cents per share from the 22 cents seen in Q3 of 2007; this reflected an increase in income of more than $4 million.

Like most utilities, Laclede Group has a fair amount of debt - total liabilities come out at over $1 billion as of June 30. You can see how lower interest rates have helped its bottom line, as interest expenses have dropped from about $10 million per quarter in 2007 to just over $6 million in this latest quarter. This $4 million difference is conveniently similar to $4 million increase in income that was seen from Q3 2007 to Q3 2008. Should Laclede Group be able to maintain lower interest expenses, I am looking for the company to continue to impress, as the 12.5 price-earnings ratio is still a bit below the industry average of 14.8, and a price to sales ratio of below 1. This makes Laclede Group a value play, even after recent price increases.

Add Your Two Cents
What do you think will happen with the utilities going forward? Will a lower rate environment continue to help out these companies, allowing for this share price momentum to continue? Be sure to join me (aytonmm) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

For further reading, be sure to check out Cyclical Versus Non-Cyclical Stocks.