ALLIANT ENERGY CORP. $23 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) provides electricity and natural gas to 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois. Like Ameren, the recession and warmer-than-usual winter weather hurt Alliant’s first-quarter earnings. In the three months ended March 31, 2009, earnings rose 6.6% to $72.6 million, or $0.66 a share, from $68.1 million, or $0.62 a share, a year earlier. However, if you disregard a one-time income-tax gain, the company’s earnings fell to $0.30 a share. Revenue fell 4.2%, to $949.9 million from $992 million. Revenue at its regulated power plants rose 7%, but that was more than offset by a 14% drop in gas revenue. In light of the weak economy, Alliant will probably wait until next year before it asks power regulators for permission to raise rates. Meanwhile, it will look for ways to lower its costs. For instance, in March the company decided to cancel a new coal-fired power plant in Iowa. This should save it $1.2 billion over the next three years. Cancelling this plant also eliminates the need for Alliant to issue new shares, which could dilute the holdings of its existing shareholders. Alliant’s shares trade at a reasonable 10.2 times its forecast 2009 earnings of $2.25 a share. The $1.50 dividend yields 6.5%. Alliant is a buy.
ALLIANT ENERGY CORP. $23 - New York symbol LNT
A professional investment analyst for more than 30 years, Pat has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.