Say AYE to Allegheny Energy

Headquartered in Greensburg, Pennsylvania, Allegheny Energy, Inc. (AYE - Analyst Report) is engaged in both regulated electricity and natural gas distribution utility operations, as well as in the unregulated wholesale energy markets.

Going forward, AYE's positive investment factors include increased plant output, increased power market prices, recovery of cost in Virginia and West Virginia, approvals for transmission projects, and Pennsylvania rate mitigation plan. Looking ahead, we expect that the company's regulated delivery utility business will provide steady earnings growth, partially offset by higher emission and hedging costs, interest burden on account of expansion plans and coal costs.

Accordingly, we maintain a BUY recommendation on AYE common stock with a six-month target price of $29.00, coupled with the regular quarterly cash dividend of $0.15 per share, which we deem sustainable and secure, represents annualized total return potential of 29.7%.

Read the full analyst report on AYE