We issued an updated research report on electric utility firm Southern Company SO on Nov 24, 2015.

Southern Company has performed well on the earnings front beating estimates in two consecutive quarters on continued improvement in electricity demand. The company enjoys stable rate base growth and constructive regulations. These positives are reflected in Southern Company’s current Zacks Rank #2 (Buy), which implies that the stock is likely to outperform the broader market over the next one to three months.

Southern Company is one of the largest electric utility holding companies in the U.S. The company’s regulated business – expected to make up roughly 90% of its consolidated earnings over the next few years – is backed by growth factors like strong and diverse regional economy, constructive regulation and comparatively tight power markets.

Also, Southern is a leader in power plant productivity, cost control and new technology research. The company continues to deliver high returns while maintaining its position as a low-cost provider of electricity.

Southern Company’s operations are expected to be boosted further by the proposed acquisition of AGL Resources GAS. The buyout will make Southern Company the second-largest U.S. utility.

By acquiring AGL Resources, which mainly deals in distributing natural gas, Southern Company should be able to step up cheap natural gas supply to its power plants. Also, as Southern Company’s customer base is expected to nearly double, it will be able to generate more revenues from gas distribution services and check its expenses.

Other Stocks to Consider

Other stocks worth considering from the electric power space are Huaneng Power International, Inc. HNP and Korea Electric Power Corp. KEP. Both these stocks sport a Zacks Rank #1 (Strong Buy).

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