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On Mar 12, Zacks Investment Research upgraded Questar Corp. (STR - Analyst Report) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Shares of Questar are trading near their 52-week high of $24.05. In fact, the Salt Lake City, Utah-based natural gas-focused energy firm has seen its stock price climb some 18% since the beginning of the year.

Despite this price appreciation, we remain optimistic on the firm’s near-term prospects, supported by consistency in its earnings/cash flows, attractive fundamentals and a positive outlook.

Following the QEP Resources Inc. (QEP - Analyst Report) spin-off in Jun 2010 – the company’s erstwhile unregulated exploration and production business – Questar has transformed itself into a company, which focuses exclusively on exploring natural gas resources while serving customers domestically and worldwide. The business units of Questar demonstrate strong development prospects, which are expected to drive a high growth rate of production and reserve in the years to come.

It pays an annual dividend of 68 cents per share, yielding a stable 2.9%. The company increased its dividend payout by 5% in Aug 2012, marking the 40th dividend increase in as many years. Questar has a long and consistent dividend paying record. The company has paid dividends in each of the last 273 quarters. As such, we believe Questar’s dividend to be safe and reliable.

Other positives in the Questar story include its focus on long-term contracts and the efficient managerial team. An above-average credit quality adds to the bullish sentiment.

Lastly, Questar continues to reap the rewards of its prudent cost cutting initiatives. As a result of its cost efficiency gains, the company has been able to reduce operating expenses, thereby improving its profitability.

Other Stocks to Consider

In addition to Questar, one can look at Atmos Energy Corp. (ATO - Snapshot Report) and Southwest Gas Corp. (SWX - Snapshot Report) as attractive investments. Both these gas distribution utilities – sporting a Zacks Rank #2 (Buy) – offer value and are worth accumulating at current levels.

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