Here’s today’s Top Picks for 2012 update, from Roger Conrad, editor of Utility Forecaster.
“The AES Corp. (AES) had a successful first half of 2012 and remains on track to begin paying its first quarterly dividend in mid-October. The company has maintained full-year 2012 earnings guidance of $1.22 to $1.30 a share, with $18 to $20 million in revenue. It also continues to focus its portfolio, selling 379 megawatts of hydropower in China for $134 million while increasing investment in targeted markets where it enjoys scale, such as Chile, Colombia, the Philippines, Turkey and Vietnam.
“That’s all part of CEO Anders Gluski’s long-term strategy of improving profitability and balance sheet strength, while steadily growing assets in key areas. Management has targeted average annual earnings growth of 8% to 10% a year through 2015, a figure it comfortably exceeded in 2011 as well as thus far in 2012.
“The company has also been successful cutting debt, with only $130 million in maturities left for 2012. And with the company’s 29-year debt now yielding just 4.3% to maturity, there’s opportunity for more refinancing to cut risk and interest costs.
“AES stock is up a bit more than 5% thus far in 2012, roughly in line with the S&P 500, of which it’s a member. It’s also been relatively steady, which is remarkable in light of its global exposure and investor worries about global growth. Corporate insiders have been steady buyers this year, raising their holdings by 13.9%. The analyst community is generally bullish at six buys, with one hold and one sell. I continue to look for a move in AES past the February high of $14 later this year, and probably to the late 2009 high of around $15. AES remain a buy up to 15.”
- Roger Conrad, Utility Forecaster, June 27, 2012