Modestly Bullish on Edison

California-based Edison International (EIX - Analyst Report) is a utility holding company operating through three principal subsidiaries: Southern California Edison Company, Edison Mission Energy and Edison Capital.

Consistent performance through its solid base of stable utility operations, ongoing alternative energy projects, balance sheet strength, and a relatively cheap earnings-based valuation, partially offset by stagnant economy, volatile gas prices, regulatory risk regarding rate hikes and recovery of capital expansion costs, support our modestly bullish outlook for Edison International.

Accordingly, we maintain our BUY recommendation on EIX common stock with a 6-month target price of $27.00. Price appreciation to our near-term valuation, coupled with the stock's $0.31 per share quarterly dividend -- which we view as very sustainable and secure given low projected payouts -- represents annualized total return potential of 18.2%.