Roger Conrad is among the advisory industry's leading expert on utilities. Here's a look at the latest featured growth stock in his The Utiliity Forecaster -- Entergy Corp. (NYSE: ETR).
"Two years ago, Entergy Corp's regulated utility business was literally in ruins. The core New Orleans subsidiary as well as units in Mississippi, Louisiana and Texas, faced billions in repair costs, and thousands of customers lost their homes.
"However, Entergy stayed on its feet for one reason: a portfolio of well-run nuclear power plants-the nation's second largest-that ran at 90 percent-plus capacity while wholesale electricity prices surged.
"With utility operations recovered, third quarter earnings surged 27.8% and are set for another 20% next year. Management shared some of that bounty by hiking dividends 38.9% in 2007. This year, shareholders will get more cash as well as a 50% interest in the company's five unregulated nuclear plants.
"Entergy will manage and own half of the nukes, which contribute 20% of overall earnings. We'll get the other half as stock of a new Spinco. The tax-free exchange is expected to take place in the third quarter of 2008.
"Entergy shares trade nearly three times book value and 17.5 times the mid-range of management's 2008 profit projections. Nonetheless, the company's a bargain as long as it keeps growing earnings and dividends close to 20%.
"The nuclear spinoff could be a real windfall, provided management can relicense the Indian Point nuke over the opposition of some New York politicians. Entergy is a buy up to 120."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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