"Wealth building is about buying quality on the cheap; and you're not going to find the best water industry stocks at better prices than they sell for now," says utility sector specialist Roger Conrad.
"All three of these water stocks posted disappointing first quarter earnings for very different reasons. However, all remain tapped into long-run, wealth-building opportunities.
"Aqua's first quarter results were by no means a disaster. But they lagged both last year's total and Wall Street estimates.
"Management blamed the slowing economy's impact on housing starts in what had been fast-growing systems, rising bad debt, lower commercial sales, delays in fully digesting acquisitions in the South and longer-than-expected timetables needed to win rate increases.
Resource industry specialists Roger Conrad and Yiannis Mostrous are bullish on the agriculture and water sectors; in their model portfolio they already hold 6 stocks in these sectors.
The co-editors of Vital Resource Investor explain, "We see strong underpinnings for continued higher agricultural prices for many years to come." Here's their latest agrculture play: EI du Pont de Nemours (NYSE: DD).
"Recently the United Nations Food Agency warned of civil war in some countries because of global food shortages. With the rapid urbanization of Asian countries, we see a growing global dependence on a shrinking number of food producing nations, particularly with the world adding 78.5 million people each year.
"There will be ups and downs for prices along the way. A throttling back of America's efforts to develop ethanol so extensively or a move to use something besides corn to brew ethanol could take some of the upward pressure off corn prices.
"A real global recession could also cause food prices to back off for a time and it's also possible we'll see some form of US government intervention to curb food prices, particularly as the presidential election develops.
"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.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Over the past 18 months, Canadian oil and gas producer trust has endured a trial by fire. First natural gas prices started tumbling.
"Then the Conservative party government announced it would begin taxing trusts as corporations starting in 2011, and restricted the number of shares trust can issue. Finally, this fall investors have bailed out of everything remotely economically sensitive.
"Through it all, however, the Enerplus has remained rock-solid as a business. For starters, the yield of nearly 13% -- paid monthly -- is backed by a modest 70% payout ratio. And that ratio was achieved by selling oil in the third quarter at less than $70 a barrel.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Mechel OAO (NYSE: MTL), Russia's second-largest producer of long steel products," is our favorite speculative play for 2008," say co-editors Roger Conrad and Yiannis Mostrous in Vital Resource Investor.
"The company operates one major steel mill with a capacity of close to 5 million tons of output per year. Mechel operates in Russia, Lithuania and other countries in Central and Eastern Europe. Its ace in the hole is a mining business that focuses on raw materials used in making steel, primarily coking coal, iron ore, nickel and steam coal.
"The company's steel business is 100% self-sufficient in coking coal, 80% in iron ore and 50% in electricity. This aspect of Mechel (i.e., vertical integration) is critical in an environment where raw material prices continue to rise. And it should support the stock because its performance this year has been nothing less than dazzling.
"Mechel is a high-cost producer, and management has worked to cut costs while improving efficiency. Those efforts have been quietly successful up to now, and we expect this to be an ongoing positive theme.
"And Russia's strong domestic demand -- within and outside the all-important energy sector -- is an additional advantage for the company. Buy Mechel at current prices."
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Like most electric utilities, Duke Energy faces a capital spending challenge in coming years, as it ramps up output to meet exploding future demand and meets new regulations on carbon dioxide. Unlike most, however, it's well positioned not only to meet the new rules but to profit from them.
"Duke's nuclear power plants have long been among the best-run in the industry. To them, the company has added a wind developer this year as well. But the real opportunity could well be in coal. In November, Duke won Indiana regulators' approval to build a 630 megawatt integrated gasification combined cycle plant (IGCC).
"By converting that state's coal to clean-burning gas, the plant will produce four times the electricity of the Edwardsville coal plant it will replace and 45% less carbon dioxide (CO2) per megawatt hour. That's not including the potential addition of CO2 capture technology.
For growth, utility expert Roger Conrad likes Comcast Corp. (NASDAQ: CMCSA), while for income, he picks the cable firm's dividend-paying notes and preferreds.
The editor of The Utility Forecaster explains, "Cash flow and revenue growth of 30%-plus is hardly utility like. But those are the numbers cable communications provider Comcast Corp. put up in the second quarter and has consistently for the past few years."
Best of all, he adds, there's no end in sight to its success. He observes, "The company added 94% more revenue-generating units in the second period than last year, a clear sign sales of its 'triple bundle' of cable TV, broadband Internet and telecom service are still accelerating."
Mergers have been commonplace in the telecom sector in recent years, and utility expert Roger Conrad expects this trend to continue. Supporting these mergers, he notes, has been industry competition, technological advances, less-stringent regulation, the natural advantages of scale and a glut of capacity.
The editor of The Utility Forecaster points out that these factors triggered dramatic industry consolidation beginning in the late 1990s, when Wall Street threw "tens of billions of dollars at hyped-up startups." More mergers, he says, are "almost surely on the way."
One likely takeover target? Alltel Communications (NYSE:AT). The company, says Conrad, has been a prolific consolidator of rural wireless assets in recent years and now serves more than 11 million customers nationwide. Debt, meanwhile, is half last year's levels because of the 2006 spinoff of its wireline assets as Windstream.
Conrad explains, "Low debt, low customer turnover and robust growth have already attracted takeover interest from private capital, as well as national wireless giants Verizon Wireless and Sprint Nextel."
Each year, Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Stocks Report.
Verizon Communications (NYSE: VZ) is the top conservative pick for 2007 from Roger Conrad. The editor of The Utility Forecaster says, "The company continues to excel in all areas, except the stock market. Verizon Wireless remains the best network in cellular, and continues to prove it every quarter with rising margins, higher sales, and very low customer cancellation rates.
"Now the company is reporting expectation-beating progress with its construction of the nation's best wireline network, which will run fiber optic cable to more than 20 million homes and businesses within the next five years. The price tag is not inconsequential at $18 billion. But the company has been able to finance it with cash flow, even while reducing debt.
"Critics continue to focus on the loss of local copper phone connections at the company to wireless and cable television rivals. That's like faulting a Super Bowl champion because its punter doesn't see enough action. Buy VZ, which yields a little less than 5%, up to 38."
To see Roger's favorite speculative idea for 2007, click here.
Each year, Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Stocks Report.
Precision Drilling (NYSE: PDS) is the favorite speculative stock for 2007 from utility specialist Roger Conrad. The editor of The Utility Forecaster notes, "Precision converted to a Canadian income trust last year and its shares were immediately off to the races, riding enthusiasm about its big dividend and growth of activity in North American drilling.
"The second half of 2006 has been 180 degrees different, due to a slump in energy patch activity in Canada and the government's proposal to tax income trusts beginning in 2011. As a result, the stock is yielding 13%, a level usually reserved for Wall Street basket cases.
"Precision, however, is far from it, holding more than 40% of the fast-growing deep drilling market in Canada and rapidly expanding on both sides of the border. Cash flow continues to cover the dividend by a generous margin, and with energy patch activity picking up in North America at the end of 2006, it should do so by an even wider margin in 2007.
"Being taxed again as a corporation would almost surely mean a lower dividend. But in the meantime, the trust will continue to pay out big, and the shares should benefit from faster energy patch activity.
"Also, the income trust tax changes are priced in, so there's no real additional risk on that front, and a possibility the ultimate change by the government will be considerably more favorable. A further slowdown in energy patch activity is also priced in to the shares, so all the potential surprises are positive and will bring upside. Buy Precision up to 30."
To see Roger's favorite conservative stock for 2007, click here.
Resource industry specialists 
"My favorite aggressive speculation for 2008 is 
"The company's steel business is 100% self-sufficient in coking coal, 80% in iron ore and 50% in electricity. This aspect of Mechel (i.e., vertical integration) is critical in an environment where raw material prices continue to rise. And it should support the stock because its performance this year has been nothing less than dazzling.
For growth, utility expert Roger Conrad likes 
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