Coal to Gas Migration Already Underway (CEG, XEL, PGN, CPN, ANR, WLT, BTU, ICO, MEE)

Tickerspy’s Electric Utility Index

ELECTRIC UTILITY INVESTING IDEAS

• Popular long ideas: DUK, SO, NEE
• Popular short ideas: NRG, D, ORA
• Top dividend plays: TAC, FE, POM
• Pro favorites: DUK, NEE, SO

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ELECTRIC UTILITY COVERAGE

These utilities focus on generating and delivering electricity

• M&A Spreads to High-Yield Electric Utilities as Investors Agree on Merger (INTC, MFE, HPQ, PAR, FE, AYE, UIL, EDE, NGG)
• Electric Utilities Producing Powerful Dividends (PGN, NGG, UIL, POM, EDE, DYN, ELP)

ELECTRIC UTILITY CHART

ELECTRIC UTILITY METRICS

Avg. Market Cap:	$11.4B
Avg. P/E Ratio:	17.6
Avg. Div Yield:	3.2%

Despite the recent push for renewable energy and clean fuels, a lack of storage technology and transmission infrastructure leaves much of the U.S. reliant upon carbon-emitting coal-fired power plants for electricity. While challenges may remain in place for some time in the solar and wind energy segments, a “migration” from coal to natural gas is already occurring, according to Constellation Energy Group (CEG) CEO Mayo Shattuck’s comments in a recent Wall Street Journal piece. The report notes that domestically, natural gas is expected to spike to 82% of new capacity in 2013, compared to just 42% in 2009, and coal-burning power plants are seen declining to 10% of new capacity from 18% last year.

The Journal notes that a number of Electric Utility Stocks Index components are either converting or have plans to convert existing coal-fired plants to burn natural gas instead, including Xcel Energy (XEL), Progress Energy (PGN), Calpine (CPN).

Despite the early transition from coal to natural gas in the U.S., China remains a primary driver for the former. The Journal indicates that China has pledged to hike the percentage of non-fossil fuels in its aggregate energy production to 15% by 2020, but coal bulls don’t seem too worried. More than half of Coal Stocks Index components are trading more than 40% above their respective 52-week lows.

At the end of the second quarter, Alpha Natural Resources (ANR) and Walter Energy (WLT) were Pro favorites in the coal space with 16 13F-filing asset managers holding shares among their top-15 U.S.-listed equity positions respectively. Meanwhile, Peabody Energy (BTU), International Coal Group (ICO), and Massey Energy Company (MEE) were also popular among the Pros.

As prices fluctuate in the energy space, and select electric utility plays aim to pare their carbon emissions, investors can track the Coal Stocks Index for performance trends and a suite of other metrics at tickerspy.com.

Tags: ANR, BTU, CEG, CPN, ICO, MEE, PGN, WLT, XEL