Emera Inc. $21 – Toronto symbol EMA

EMERA INC. $21 (Toronto symbol EMA; Income Portfolio, Utilities sector, Shares outstanding: 111.4 million; Market cap: $2.3 billion; SI Rating: Average) is the main supplier of electricity in Nova Scotia. It has 475,000 residential, commercial and industrial customers. Emera also distributes power to 110,000 customers in Bangor, Maine. Emera is now investing heavily in several new growth projects. For example, it plans to spend $350 million building the Brunswick Pipeline, which will move natural gas from a proposed liquefied natural gas (LNG) terminal in Saint John, New Brunswick to markets in the Northeastern United States. Emera has a 25-year deal with the owners of the LNG facility, which cuts the risk of this investment. The company also paid $46 million U.S. for 50% of the new Bear Swamp hydro-electric facility in northern Massachusetts, plus $22 million U.S. for 19% of the main electrical utility on the Caribbean island of St. Lucia. These are big commitments for Emera, which earned $40.9 million in the third quarter of 2007. That’s more than double the $19.5 million it earned in the year-earlier quarter. Per-share earnings rose 94.4%, to $0.35 from $0.18, due to more shares outstanding. Revenue rose 13.9%, to $310.3 million from $272.4 million. Cash flow per share improved 37.3%, to $0.81 from $0.59. These new assets enhance Emera’s long-term earnings potential. They also help Emera cut its reliance on its main Nova Scotia Power subsidiary, which accounts for 80% of its earnings. The stock now trades at 15.3 times its projected 2008 earnings of $1.37 a share. The company recently raised its dividend for the second time in six months. The new rate of $0.95 yields 4.5%. Emera is a buy.

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