Texas is Booming and So Are These Texas Stocks (EE, TPL & ATO)

Texas has just set another record for job creation – meaning it might be worth it for investors to take a closer look at Texas based stocks like El Paso Electric Company (NYSE: EE), Texas Pacific Land Trust (NYSE: TPL) and Atmos Energy Corporation (NYSE: ATO) that have good exposure to the booming Texas economy. I should mention that I wrote about these stocks before back in late 2012 (see: Do These Texas Stocks offer Texas Sized Returns? EE, ATO & TPL), but the Texas Workforce Commission has reported that the Texas economy added 36,400 jobs in September while over the past 12 months, employers added 413,700 jobs — the most ever recorded by the state. In addition, several companies surveyed by the Dallas Fed responded that they are seeing labor market tightness plus companies are saying they are experiencing upward wage pressures while staffing firms note that candidates are often receiving multiple offers. Given that Texas is a deep "red state" with a business friendly climate where taxes and regulations are much lighter than in any "blue state," there is no reason to believe the boom won't continue.

With that in mind, here is a look at three Texas stocks that are sure to benefit from the Texas economic miracle:

El Paso Electric Company. A regional electric utility, small cap El Paso Electric Company provides generation, transmission and distribution service to approximately 394,000 retail and wholesale customers in a 10,000 square mile area of the Rio Grande valley in west Texas and southern New Mexico. The company's service territory extends from Hatch, New Mexico to Van Horn, Texas and includes two connections to Juarez, Mexico and the Comisión Federal de Electricidad (CFE), Mexico's national utility. El Paso Electric Company's principal industrial and large customers would include steel production, copper and oil refining, and United States military installations including the United States Army at Fort Bliss in Texas and the White Sands Missile Range and Holloman Air Force Base in New Mexico. In early August, El Paso Electric Company reported second quarter net income of $30.1 million verses $29.2 million for the same period last year with the next earnings report scheduled for November 5th. El Paso Electric Company has a trailing P/E of 16.92 and a forward P/E of 15.23 along with a $1.12 forward dividend for a 3.10% dividend yield. On Friday, small cap El Paso Electric Company fell 0.225 to $35.72 (EE has a 52 week trading range of $33.44 to $40.43 a share) for a market cap of $1.44 billion plus the stock is up 2.29% since the start of the year, up 0.82% over the past year and up 87.3% over the past five years.

Texas Pacific Land Trust. One of the largest landowners in Texas with around 911,217 acres located in eighteen different counties, small cap Texas Pacific Land Trust was created in 1888 as a result of a reorganization of the Texas and Pacific Railway Company following receivership. Holders of Texas and Pacific Railway Company bonds received 3.5 million acres of land in Texas which had been earned by the railroad and pledged as security against bonds. The Trust was then created by the bond holders with converted bonds to shares of proprietary interest in the Trust which was also put in charge of managing and selling the land. Texas Pacific Land Trust does not produce much news with the last Form 10-Q noting that total second quarter operating and investing revenues rose 56.6% to $15,583,264 due primarily to increases in oil and gas royalty revenue, easement and sundry income, and land sales. Texas Pacific Land Trust has a trailing P/E of 41.99 and a forward dividend of $0.27 for a 0.20% dividend yield. On Friday, small cap Texas Pacific Land Trust rose 9.4% to $164 (TPL has a 52 week trading range of $83.50 to $242.00 a share) for a market cap of $1.39 billion plus the stock is up 65.2% since the start of the year, up 94.9% over the past year and up 411.7% over the past five years.

Atmos Energy Corporation. One of the country's largest natural-gas-only distributors, mid cap Atmos Energy Corporation serves over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy Corporation also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast. In early August, Atmos Energy Corporation reported that fiscal third quarter net income, excluding net unrealized margins, was $46.1 million compared with consolidated net income, excluding net unrealized margins and a gain on sale, of $39.4 million. The CEO commented:

"While we continue to focus on providing safe and reliable service to our customers, the predictable and stable nature of our regulated operations offers strong earnings growth. As we enter the final quarter of our fiscal year, we remain on track to meet our earnings guidance of between $2.80 and $2.90 per diluted share in fiscal 2014," Cocklin concluded."

Atmos Energy Corporation has a trailing P/E of 17.77 and a forward P/E of 17.21 along with a forward dividend of $1.48 for a dividend yield of 2.90%. On Friday, mid cap Atmos Energy Corporation rose 2.22% to $50.21 (ATO has a 52 week trading range of $42.49 to $53.47 a share) for a market cap of $5.04 billion plus the stock is up 11.1% since the start of the year, up 16.9% over the past year and up 73.7% over the past five years.

Finally, here is a look at the long term performance chart for all three Texas stock:

As you can see from the above performance chart Texas Pacific Land Trust has produced a Texas sized return for investors while El Paso Electric Company and Atmos Energy Corporation have also produced good and steady returns as well.