Tags: Allete | niche | utility | ALE

Allete: Attractive Midwest Niche Utility

By    |   Thursday, 02 Feb 2012 08:24 AM

Allete (ALE) represents an attractive niche play in the utility space. Its businesses are in the upper Midwest. Allete operate two electric utilities: Minnesota Power, which serves more than 144,000 customers in the northern part of the state, and Superior Water, Light & Power in Wisconsin.

The company also has an 8 percent stake in American Transmission Co., a Wisconsin utility. In addition, Allete has a business that produces coal in North Dakota (BNI Coal), a clean energy business, and a properties division that owns 10,000 acres of real estate in northeast Florida.

Allete Clean Energy may have potential for strong growth. It seeks to provide clean energy to customers around the country, such as electric utilities, cooperatives, municipalities, independent power marketers, and large end users.

The projects, ranging from $50 million to $150 million, will include wind energy, hydropower, biomass, natural gas, and liquefied fossil fuels.

“Our recent launch of Allete Clean Energy positions us well for the clean energy, energy independent future America is calling for and the energy-centric growth we envision coming from it,” Alan Hodnik, the company’s CEO, said in its latest earnings conference call.

The company plans to shell out $1 billion in its five-year capital plan, including a wind energy program in North Dakota.

Appealing yield


Allete shares offer an appealing yield of 4.3 percent and the stock produced an annualized total return of 15.73 over the past three years. Allete’s profit rose 5 percent in the third quarter to $20.5 million from $19.6 million a year earlier. Revenue climbed 1 percent to $226.9 million.

Of five analysts tracked by Thomson/First Call, two rate Allete shares a strong buy, one a buy, and two a hold.

The company next reports earnings Feb. 15.

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2012-24-02
Thursday, 02 Feb 2012 08:24 AM
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