FPL (FPL) Renewable leader

"No utility is better positioned in renewable energy than FPL Group (NYSE: FPL), America’s top producer of both wind and solar power," says Roger Conrad in The Utility Forecaster.

"Government mandates, a flood of federal money and near-certain carbon regulation make renewable energy a sure bet for recession-ravaged 2009.

"Historically, FPL’s core has been Florida Power & Light, an electric utility blessed by hot summers, robust customer growth and friendly regulation.

"Starting in 2008, however, unregulated power production unit NextEra Energy became its biggest earner, with $2.04 of FPL’s $3.84 per-share profit. As a result, overall company earnings grew 10% despite shrinking utility sales on 0.% fewer customers.

"Looking ahead, the utility is likely to remain weak, even after a 10% cut in operating costs below projections. Investments in regulated natural gas, nuclear and renewable plants and efficiency, however, will add to its rate base.

"Moreover, bad debt is still less than 0.25% of revenue. And, not counting mild weather, fourth quarter regulated utility earnings actually rose.

"As for NextEra, it expects to add another 1,100 megawatts (MW) of wind power this year, part of a plan to more than double current capacity of 6,375 MW by 2013.

"Cash flow is locked in by hedging 90% of output through 2010. And the success of recent stock and bond offerings demonstrate no financing challenges.

"Steady utility operations and torrid renewable energy growth add up to profit projections of $4.05 to $4.25 a share for 2009 and $4.50 to $4.90 for 2010. Buy FPL Group up to 55."