In today's unpredictable, seemingly continually changing investment climate, it's prudent to own an "old reliable" stock or two, and Northeast Utilities (NU) qualifies.

Northeast Utilities, first discussed here on May 5, 2009, at a price of $21.48, offers the opportunity to net a modest gain, plus a dividend.

Northeast's proposed merger with NStar (NST) should close in the second half of 2011 and create one of the largest utility companies in the United States. The deal should be accretive to earnings in 2011. Northeast's annual dividend is $1.60.

If you'd like a quintessential example of an uncertain, volatile investment landscape, the contemporary era is it. Not two months back, emerging markets were the rage. Today? Well, let's just say the rate-of-return expectations are slightly more-modest for the EMs. And this climate it can pay to own an "old reliable" stock play or two, and Northeast Utilities (NU) qualifies.

Northeast Utilities offers the opportunity to net a modest gain, plus a dividend. I first discussed the stock here on May 6, 2009, at a price of $21.48.

You know what investing in this market is like: financial events pop up idiosyncratically to objectively change credit market and/or economic conditions, both domestically and abroad.

And that means many investors could benefit from a sleep-well-at-night stock or two, and Northeast Utilities (NU), first discussed here on May 5, 2009 at a price of $21.48, fits the bill.

Northeast's proposed merger with NStar (NST) should close in the second half of 2011, and create one of the largest utility companies in the U.S. The deal should be accretive to earnings in 2011.

Northeast Utilities (NU), first discussed here on May 5, 2009 at a price of $21.48, announced Monday it will merge with Nstar Corp (NST), in a $4.17 billion deal, subject to shareholder and regulatory approvals.

NU called the deal a merger, but after the deal closes Northeast's shareholders will likely own a 56% stake in the combined business; Nstar's shareholders, a 44% stake.

It's not a U.S. stock market for the squeamish, so if you're considering adding to your portfolio or are new to stock investing and you still want to sleep well at night, consider Northeast Utilities (NU), first discussed here on May 5, 2009 at a price of $21.48.

Connecticut-based NU should provide safety, a decent dividend, and modest growth too. That's not bad, given a financial and economic environment still subject to financial market stress.

Consider this: During the depths of the market low in March 2009, NU dropped to ...about $18.90 -- hardly a portfolio-wrecker.

Analyst Upgrades

• Deutsche Bank upgraded Illinois Tool Works (ITW) to buy from hold, citing valuation and the company's strong revenue performance. The firm has a $60 price target for shares.
• Goldman upgraded PPD Inc. (PPDI) to buy from hold and raised its price target to $31 from $28. The firm expects strong top line growth and bookings momentum for the upgrade.
• Stifel Nicolaus upgraded Insituform Technologies (INSU) to buy from hold based on higher estimates for sewer rehab and energy. The firm has a $31 target on the stock.
• Patterson-UTI Energy (PTEN) was upgraded to overweight from equal weight at Morgan Stanley.
• Wisconsin Energy (WEC) and Northeast Utilities (NU) were upgraded to buy from neutral at UBS.
• Rockwell Collins (COL) was upgraded to buy from neutral at BofA/Merrill.

Option traders are pushing up call option prices in the Security Software & Services industry as well as pushing up put option prices in the Diversified Utilities industry today.

Any time the volatility skews above 1.00, it is an indication that calls are more expensive than puts. Typically, when calls are more expensive than puts, it means the demand for calls is greater than the demand for puts because investors believe the stock is going to rise in the future and they want to take advantage of that movement by buying calls.

We can make this short and sweet: buying utilities pays off in many ways that other investments do not. Utilities pay regular dividend distributions that are higher than most stocks, bonds, Treasuries, and certificates of deposit. In these volatile times, utility stocks add stability to your portfolio and moderate the wild swings. And, here is the kicker that everyone but day traders will appreciate: long term returns beat all of the major indices over time.

The following charts and stocks will further make the case.

Looking for a stock investment that provides provides safety, as well as some growth. Well, you may want to consider Northeast Utilities (NU), first discussed here on May 5, 2009 at a price of $21.48.

During the depths of the market low in March 2009, NU dropped....to about $18.90 -- hardly a portfolio-wrecker.

Investors should not expect mega-revenue growth or gargantuan customer growth with NU, just predictable, steady earnings growth, evenly split between the company's generating/distribution business and its transmission. Look for the company's transmission sector to play an increase role in revenue growth, moving forward. NU serves about 1.9 million customers, primarily in Connecticut, but also in New Hampshire and Massachusetts.

Option traders pushed up call option prices in the general entertainment industry and pushed up put option prices in the diversified utilities industry today.

Bullish Volatility Skews

• World Wrestling Entertainment Inc. (WWE) -- part of the general entertainment industry -- came in at the top with a volatility skew of 1.18. This may come as a surprise as WWE is down 1.53% for the past month.

It goes without saying that one sector I've liked for years has been the electric power generation sector, and within this category Northeast Utilities (NU), which I first wrote about on May 6, 2009 at a price of $21.48, is a standout.

Investors should not expect mega revenue growth or gargantuan customer gains with NU, just predictable, steady earnings growth, evenly split between the company's generating/distribution business and its transmission operation. Further, look for the company's transmission sector to play an increasing role in revenue growth, moving forward. NU serves about 1.9 million customers, primarily in Connecticut, but also in New Hampshire and Massachusetts.

Analyst Upgrades

• Citigroup upgraded Chevron (CVX) to buy from hold after raising its long-term oil price assumption to $80 per barrel from $65. The firm raised its target price for Chevron shares to $97 from $78 and said it expects oil prices to push towards $90 per barrel in the near-term. Note, Citi also upgraded BP (BP) and Petrobras (PBR) Monday morning to buy from hold.
• Jefferies upgraded Overseas Shipholding (OSG) and Nordic American Tanker (NAT) to buy from underperform as it expects crude oil tanker charter rates to improve in 2010 based on expectations for increased OPEC production levels. The firm raised its target on Overseas Shipholding to $60 from $22 and on Nordic American to $41 from $25.
• Goldman upgraded Corning (GLW) to buy from neutral as they believe the LCD cycle may have bottomed in 4Q09 vs. their previous expectation of 2H10. The firm raised its target to $23 from $18. Shares were also upgraded to buy from hold at Deutsche Bank on expectations that consensus estimates will trend higher due to robust TV demand and tight capacity. The firm raised its target price on shares to $24 from $19.
• Lam Research (LRCX) was upgraded to buy from neutral at UBS.
• Intel (INTC) was upgraded to hold from sell at Auriga.
• Regal Entertainment (RGC) was upgraded to overweight from market weight at Thomas Weisel.

It goes without saying that I favor the electric power generation sector, and among them, fewer are steadier than Connecticut-based Northeast Utilities (NU), hence I'm reiterating my buy rating for the company, first recommended on May 6, 2009 at a price of $21.48.

Don't look for mega revenue growth or gargantuan customer gains with NU, just predictable, steady earnings growth, evenly split between the company's generating/distribution business and its transmission business; look for the company's transmission sector to play an increasing role in revenue growth, moving forward. NU serves about 1.9 million customers, primarily in Connecticut, but also in New Hampshire and Massachusetts.

Rare is the day I'll sell an electric power generation play. I'm reiterating my Buy rating for Northeast Utilities (NYSE: NU), first recommended on May 6, 2009 at a price of $21.48.

NU's business model is low-risk -- its electric unit primarily serves customers (1.9 million in all) in land-of-steady-habits Connecticut, Western Massachusetts, and New Hampshire, and offers above-average total return, with only a modest downside risk. In this investing environment, that's impressive.

Readers of this space know that one of the preferred sectors is the electric power generation sector.

And the sector is favored for a reason that may not be obvious to all. Electricity via wind, solar, and nuclear generation is likely to play a large role in energy as climate change reduction, then elimination, becomes a societal goal. Electricity also remains a potential propulsion source for cars, particularly once oil resumes its inevitable climb. And with the above in mind, electric power generator Northeast Utilities (NYSE: NU) is worth a review.