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Entergy (ETR) keeps the lights on in areas in Arkansas, Louisiana, Mississippi and Texas. It operates nuclear, natural gas and coal power plants, and it trades electricity, gas and other commodities in the U.S. and Europe.
The second-largest operator of nuclear power plants in the U.S. maintains a low exposure to fluctuating gas prices and a good relationship with regulators. Entergy is also dedicated to sharing its success with shareholders -- it recently increased its dividend nearly 30%. The stock yields 3.1%.
About 10% of Entergy's earnings come from its energy trading ventures. After disasters at Enron and Mirant, this practice has become a hot topic among regulators. But Morningstar analyst Venkatesh Vadlamani says Entergy "has among the best risk-management practices in the energy-trading business." The unit is growing quickly and should help bolster the utility's balance sheet.
Earnings have been helped along by rate increases and improving sales -- trends analysts expect to continue. The stock trades at 14 times 2004 consensus earnings estimates of $4.23 per share. Profits should grow about 10% annually for the next few years.
--Erin Burt
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