StockScouter loves utilities

Holy Moley, have we got utilities for you!

MSN Money's StockScouter tool came up with its 50 best picks for August, and you'd think there was nothing in the world except telephone companies, electric utilities, gas distribution companies and the like.

There are nine companies in the telecommunications industry, five in natural gas utilities, three oil and gas pipelines, 26 electric utilities (or electric utility and gas).

Sure, we have a couple of banks -- City Bank (CTBK, news, msgs), Heritage Commerce (HTBK, news, msgs) and Mackinac Financial (MFNC, news, msgs)), one biotech company -- Serano (SRA, news, msgs) -- and a fine old industrial machinery maker in Ingersoll Rand (IR, news, msgs).

But this is a utilities list -- and one of the most concentrated we've seen from StockScouter since last fall when, in the aftermath of Hurricane Katrina, the list was all oil and natural gas.

And perhaps it doesn't surprise. The Dow Jones Utilities index ($UTIL) has been one of the top-performing indexes so far in 2006 with a 4.7% gain in July and 7% gain so far this year – better than the Dow Jones industrials ($INDU), the Standard & Poor's 500 index ($INX) or the Nasdaq Composite index ($COMPX).

MSN Money and Gradient Analytics built the StockScouter tool several years ago. It offers a number between 1 and 10 on whether a stock is a buy. Eight through 10 is a buy; 1 means "Stay away."

The tool's goal is to help individual investors quickly analyze and assess a stock’s potential for outperforming the broad market. And it is just one tool that investors ought to use before making an investment in a stock.

StockScouter, like similar systems that cost Wall Street pros hundreds of thousands of dollars per year, depends on advanced mathematics, software, an innovative mix of measurements and historical testing to attempt to forecast the short- and long-term outlook for all U.S. companies that have traded on the three major exchanges for at least the past six months. Recently, that represented a universe of about 5,500 stocks.

• Check here for more on how the tool works.

Meanwhile, here are StockScouter's August picks.

-- Charley Blaine

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