EMERA INC. $35 - Toronto symbol EMA

EMERA INC. $35 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 142.1 million; Market cap: $5.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.1%; TSINetwork Rating: Average; www.emera.com) is Nova Scotia’s main power supplier. It also holds interests in electrical utilities in the U.S. and the Caribbean.

The company recently sold 8.7 million common shares at $28.85 each. That increased the total number outstanding by 6.5%.

Emera will use the $239.9-million net proceeds to help fund its $1.6-billion Maritime Link project, which will transmit electricity from the island of Newfoundland to Nova Scotia through an undersea cable. The power will come from a new hydroelectric project on Labrador’s Churchill River.

Separately, Emera will pay $390 million for a 34.5% stake in a new utility that will transmit power from Churchill River to Newfoundland.

Meanwhile, the company earned $259.4 million in 2013, up 12.5% from $230.5 million in 2012. Earnings per share rose 5.9%, to $1.96 from $1.85, on more shares outstanding. Revenue increased 8.3%, to $2.2 billion from $2.1 billion.

Emera recently acquired three gas-fired power plants in New England and a power utility on the island of Dominica; these assets were the main reason for the gains.

The stock trades at 18.6 times the company’s likely 2014 earnings of $1.88 a share. That’s still an acceptable p/e ratio in light of the steady earnings its new projects will supply. Emera has long history of raising its dividend. The current annual rate of $1.45 a share yields 4.1%.

Emera is a buy.

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