PowerRatings Best of the Requests: ED, GXP, AMN, MDU

Stocks in this week's report on the PowerRatings Best of the Requests features a pair of high PowerRatings utilities companies, a stock that investors should steer clear of – and another name from that last stock's industry group that people aren't asking about, but should be.

First, let's take a look at the stocks that investors are asking about, that based on the Long Term PowerRatings of those stocks, are truly worth enquiring about.

It is little surprise that Consolidated Edison (ED@ED | Quote | Chart | News | PowerRating) would appear on this list of stocks that active investors want to know more about. Consolidated Edison has a Long Term PowerRating of 9, making the utility company among the better potential investments for active investors looking for stocks that are both more reliable and better performers than the average stock.

We found in our research on stock price behavior from 1995 to 2007 that stocks with Long Term PowerRatings of 9 were higher one year later more than 79% of the time. This compares favorably to the average stock, which our research indicated was higher one year later less than 68% of the time.

Consolidated Edison also belongs to the Diversified Utilities industry group, a top rated industry group with a Industry PowerRating of 10. We have found that industries with PowerRatings of 10 have been among the best places for investors to look for stocks. Why? Our research into industry group behavior revealed that the best industry groups, the industry groups with PowerRatings of 10, have actually produced average annualized returns of more than 35% between 1995 and 2007.

This makes a stock like Consolidated Edison all the more attractive for investors looking for stocks that are both reliable as well as likely to outperform the average stock.

Consolidated Edison, by the way, was featured in our Stock Spotlight almost a month ago on April 30th. Click here to read our PowerRatings analysis of the stock.

Another utilities stock that has been on active investor's minds lately is Great Plains Energy (GXP@GXP | Quote | Chart | News | PowerRating). Unlike Consolidated Edison, however, Great Plains is not a diversified utilities company but instead belongs to the Electric Utilities industry group..

As far as the Industry PowerRatings are concerned, however, there's little difference insofar as both Diversified and Electric Utilities have earned out top PowerRating for industry groups. And there is little difference between the two utilities companies them selves when it comes to Long Term PowerRatings, as well. With its 9-rating Great Plains Energy like Con Ed, has a much higher reliability factor than the average stock and, historically speaking, has outperformed the average stock handily.

The last stock I want to mention is one that investors were obviously interested in, but one that investors hopefully will not spend too much time considering as a candidate for investment. This stock is Ameron International Corporation (AMN@AMN | Quote | Chart | News | PowerRating), a building materials company with a rock-bottom Long Term PowerRating of 1. And while we do not necessarily think that stocks with Long Term PowerRatings of 1 should be shorted, our data suggests that such stocks, at a minimum, be avoided.

Instead of Ameron International, investors who are looking for a play in the building materials industry group might instead consider a stock like MDU Resources Group (MDU@MDU | Quote | Chart | News | PowerRating), which has a Long Term PowerRating of 8 and sits atop the General Building Materials industry.

Interestingly, the same industry group that features both 1-rated Ameron and 8-rated MDU Resources actually has an impressive Industry PowerRating of 9. We found that industry groups with PowerRatings of 9 fared only slightly less impressively than top-rated industry groups with PowerRatings of 10, with 9-rated stocks producing average annualized returns of more than 24% between 1995 and 2007.

Looking for more long-term solutions to your investing problems? Don't let the volatility of this market lead you to miss out on stocks you'll be glad to have bought a year from now.

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David Penn is Senior Editor for PowerRatings.net.