Electric utility shares may rise 15 pct-Barron's

NEW YORK, April 6 (Reuters) - Shares in electric utilities such as American Electric Power (AEP.N: Quote, Profile, Research), PG&E (PCG.N: Quote, Profile, Research) and CMS Energy (CMS.N: Quote, Profile, Research) may rise 10 percent to 15 percent in the coming year, according to a report in Barron's April 7 edition.

The story, which also talked up Westar Energy (WR.N: Quote, Profile, Research) and Wisconsin Energy (WEC.N: Quote, Profile, Research), said that investors may have overreacted to worries of higher fuel costs, tougher regulation and a reliance by these companies on debt capital.

While utilities -- seen as a safe haven in a tough economy -- take on more debt than other industries, they've had little trouble finding financing in the tight credit market due to the stability of their business, according to the story.

While investors have been paying more attention to dividend payouts than price-to-earnings ratios Citigroup analyst Greg Gordon favors American, Electric Power, PG&E, CMS and Wisconsin Energy, which have relatively low dividend yields but good earnings prospects, Barron's said.

This is because low-yielding utilities tend to have a better growth outlook because they invest heavily, according to the story.

For example, the analyst sees PG&E shares rising to $46 from $38 as it has projected annual earnings growth of 8 percent over the next few years. He sees American Electric Power rising to $50 from current levels of about $43.