XCEL Energy, Incorporated (XEL) is a holding company engaged primarily in the utility business. During the year ended December 31, 2006, Xcel Energy's operations included the activity of four wholly owned utility subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are Northern States Power Company and Northern States Power Company, Public Service Company of Colorado and Southwestern Public Service Company. Along with WestGas Interstate, Inc., an interstate natural gas pipeline company, these companies comprise the continuing regulated utility operations of Xcel Energy.
Xcel is a leading combination electricity and natural gas energy company that offers a comprehensive portfolio of energy-related products and services to 3.3 million electricity customers and 1.8 million natural gas customers. The company has regulated operations in 8 Western and Midwestern states, and revenue of $10 billion annually; own more than 33,000 miles of natural gas pipelines; and operate power plants that generate over 15,200 megawatts of electric power.
The company is valued as a leader in the energy industry by demonstrating excellence in environmental performance. The most recent National Renewable Energy Lab's ranking of green pricing programs ranked their Windsource and Renewable Energy Trust first in number of customers and fifth in energy sales out of over 500 U.S. utilities. The company's environmental commitment includes improving air quality, conserving resources, harnessing renewable energy, and protecting wildlife and habitats.
Xcel is strong fundamentally with lots of free cash flow and very healthy operating margins. The latest earnings announcement for 2006 showed regulated utility income from continuing operations was $606 million versus $539 million in 2005. Increased earnings for 2006 were primarily due to a stronger base electric utility margin.
The stock is looking pretty good technically as well with projections going into the $26 to $27 per share range. Xcel also has a liquid options market that also offers LEAPS extending out to January of 2009. This allows the options strategist plenty of time to capture the upside move without having to purchase the stock outright. In addition, by using options the trader has far less capital at risk versus buying the underlying equity.
Figure 1: Elliot Wave-4 Buy Pattern for XCEL Energy, Incorporated
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