FORTIS INC. $33 - Toronto symbol FTS

FORTIS INC. $33 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 186.9 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, the U.S. and the Cayman Islands.

Fortis had hoped to buy Central Vermont Public Service Corp. (New York symbol CV), which distributes electricity in Vermont, but it was outbid by Quebec natural gas distributor Gaz Metro LP. As a result, Fortis received a breakup fee of $11 million (after tax). Fortis also sold a 40% stake in its power poles in Newfoundland for $46 million. This cash will help the company pursue more acquisitions in the U.S.

Fortis probably earned $1.69 a share in 2011. The stock trades at 19.5 times that figure. It also trades at 18.8 times Fortis’s projected 2012 earnings of $1.76 a share. These are high p/e ratios for a utility that gets over 90% of its revenue from slow-growing regulated businesses.

Fortis is a hold.

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