What Does Four More Years Mean for Big Energy and Utilities?

by Louis Navellier | November 29, 2012 10:00 am

What Does Four More Years Mean for Big Energy and Utilities?

Since President Obama won the popular vote on November 6, the utilities sector has declined over 2.9% and energy has dropped 4.6%. And that’s because with another four years under President Obama, these sectors are going to have to make some historic changes.

Under the Obama Administration, the Environmental Protection Agency (EPA) has pushed for lower carbon pollution standards for new power plants. And utilities have responded by phasing out their coal powered plants in favor of natural gas and biomass powered plants. With further regulations to curb mercury and other toxic air pollution, power plants are going to need to be vigilant to keep their emissions up to code.

The EPA estimates that the mercury and air toxins addition will cost utilities companies nearly $11 billion a year—this is on top of the $21 billion cost associated with ongoing clean air regulations.

But that’s not to say that all energy and utilities companies will be hurt by these new regulations. In fact, those that are first to embrace biofuels and other sources of renewable energy oftentimes find themselves on the receiving end of government support. This administration has made the largest investment in clean energy in U.S. history, helping to double renewable energy production in the past four years. The big winners over the past few years have been wind, solar and geothermal energy.

That being said, if you’ve placed a big bet on energy and utilities, you may want to start rethinking your strategy. As a starting point, here are the 19 alternative energy and utilities companies that are buys right now in my Portfolio Grader stock rating system.

(Now, I’ve also included players from outside the U.S., and that’s because Obama Administration has also lowered trade barriers and tariffs to “environmental goods and services” from abroad. This move will undoubtedly fatten the profits of some international players as well.)

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
ADGE[1] American DG Energy A C B
ARTNA[2] Artesian Resources Corp. B C B
AWK[3] American Water Works A C B
AWR[4] American States Water A B B
BKH[5] Black Hills B C B
CHC[6] China Hydroelectric Corp. A C B
CHG[7] CH Energy Group (Holding Co.) A C B
CMS[8] CMS Energy A C B
CPN[9] Calpine Corp. B C B
DTE[10] DTE Energy A C B
HNP[11] Huaneng Power International A B A
NGG[12] National Grid PLC A C B
NI[13] NiSource B C B
PCG[14] PG&E B C B
SBS[15] Companhia de Saneamento Basico do Estado de Sao Paulo ADS A B A
SCG[16] SCANA B C B
SRE[17] Sempra Energy A C B
WEC[18] Wisconsin Energy A B B
WTR[19] Aqua America A C B

But just because a company is green doesn’t mean that it has a green light to buy. I would recommend that you stay away from the following 21 companies:

 

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
AEE[20] Ameren F C D
AES[21] AES F C F
AT[22] Atlantic Power D C D
AVA[23] Avista D D D
CNP[24] CenterPoint Energy D D D
CWT[25] California Water Service Group D B D
D[26] Dominion Resources D D D
DYN[27] Dynegy F C F
ED[28] Consolidated Edison D C D
EOC[29] Empresa Nacional de Electricidad S.A. ADS D C D
GNE[30] Genie Energy D C D
MDU[31] MDU Resources Group D D D
NRG[32] NRG Energy D D D
ORA[33] Ormat Technologies D D D
PEG[34] Public Service Enterprise Group D C D
SJW[35] SJW Corp. D B D
SYMX[36] Synthesis Energy Systems D C D
TAC[37] TransAlta Corp. F D F
TE[38] TECO Energy F C D
TRIT[39] Tri-Tech Holding F C D
VE[40] Veolia Environnement S.A. ADR F C D

Tomorrow’s the day that we receive the latest estimate for third-quarter GDP, and you can bet that I’ll be covering that, so please stay tuned!

Endnotes:
  1. ADGE: http://studio-5.financialcontent.com/investplace/quote?Symbol=ADGE
  2. ARTNA: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARTNA
  3. AWK: http://studio-5.financialcontent.com/investplace/quote?Symbol=AWK
  4. AWR: http://studio-5.financialcontent.com/investplace/quote?Symbol=AWR
  5. BKH: http://studio-5.financialcontent.com/investplace/quote?Symbol=BKH
  6. CHC: http://studio-5.financialcontent.com/investplace/quote?Symbol=CHC
  7. CHG: http://studio-5.financialcontent.com/investplace/quote?Symbol=CHG
  8. CMS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMS
  9. CPN: http://studio-5.financialcontent.com/investplace/quote?Symbol=CPN
  10. DTE: http://studio-5.financialcontent.com/investplace/quote?Symbol=DTE
  11. HNP: http://studio-5.financialcontent.com/investplace/quote?Symbol=HNP
  12. NGG: http://studio-5.financialcontent.com/investplace/quote?Symbol=NGG
  13. NI: http://studio-5.financialcontent.com/investplace/quote?Symbol=NI
  14. PCG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PCG
  15. SBS: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBS
  16. SCG: http://studio-5.financialcontent.com/investplace/quote?Symbol=SCG
  17. SRE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SRE
  18. WEC: http://studio-5.financialcontent.com/investplace/quote?Symbol=WEC
  19. WTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=WTR
  20. AEE: http://studio-5.financialcontent.com/investplace/quote?Symbol=AEE
  21. AES: http://studio-5.financialcontent.com/investplace/quote?Symbol=AES
  22. AT: http://studio-5.financialcontent.com/investplace/quote?Symbol=AT
  23. AVA: http://studio-5.financialcontent.com/investplace/quote?Symbol=AVA
  24. CNP: http://studio-5.financialcontent.com/investplace/quote?Symbol=CNP
  25. CWT: http://studio-5.financialcontent.com/investplace/quote?Symbol=CWT
  26. D: http://studio-5.financialcontent.com/investplace/quote?Symbol=D
  27. DYN: http://studio-5.financialcontent.com/investplace/quote?Symbol=DYN
  28. ED: http://studio-5.financialcontent.com/investplace/quote?Symbol=ED
  29. EOC: http://studio-5.financialcontent.com/investplace/quote?Symbol=EOC
  30. GNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=GNE
  31. MDU: http://studio-5.financialcontent.com/investplace/quote?Symbol=MDU
  32. NRG: http://studio-5.financialcontent.com/investplace/quote?Symbol=NRG
  33. ORA: http://studio-5.financialcontent.com/investplace/quote?Symbol=ORA
  34. PEG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PEG
  35. SJW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SJW
  36. SYMX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SYMX
  37. TAC: http://studio-5.financialcontent.com/investplace/quote?Symbol=TAC
  38. TE: http://studio-5.financialcontent.com/investplace/quote?Symbol=TE
  39. TRIT: http://studio-5.financialcontent.com/investplace/quote?Symbol=TRIT
  40. VE: http://studio-5.financialcontent.com/investplace/quote?Symbol=VE

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