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Zacks Investment Research upgraded electric utility Southern Company (SO - Analyst Report) to Zacks Rank #2 (Buy) on Apr 2, 2013.

Why the Upgrade?

Southern Company delivered positive earnings surprise in the last quarter with a beat of 12.82%. The long-term expected earnings and sales growth rate for this stock are 4.98% and 1.24%, respectively.

Southern Company is constructing two nuclear units at Vogtle nuclear plant, close to Waynesboro, Ga. The two units are scheduled to start operation in 2017 and 2018, respectively. Management expects the units to generate huge electricity to provide power to roughly 500,000 homes and businesses in Georgia.  

In the first half of March, 2013, Mississippi Power Co. − a wholly owned subsidiary of Southern Company – received approval from the Mississippi Public Service Commission (PSC) to increase customer rates by 15%. As a result, Mississippi Power will be able to recover the construction cost of a new power plant in Kemper.

Georgia-based Southern Company is one of the largest generators of electricity in the nation, serving regulated and competitive markets across the southeastern region of U.S. The company continues to earn returns that are among the highest in the industry, while at the same time maintains its position as a low-cost provider of electricity with superior customer satisfaction levels.

Moreover, Southern Company expects to invest approximately $14.0 billion over the three-year period of 2012 – 2014, the bulk of which is dedicated to regulated businesses with the main focus on transmission, distribution and generation facilities. This is expected to result in significant rate base and earnings growth through an increase in efficiency and production.

Other Stocks to Consider

In the electric utility space, Brookfield Infrastructure Partners LP (BIP - Snapshot Report), Edison International (EIX - Analyst Report) and Empresa Nacional de Electricidad SA (EOC - Snapshot Report) display better fundamentals and currently hold a Zacks Rank #1 (Strong Buy).

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