NextEra Energy (NYSE:NEE), AES (NYSE:AES) Top Power Stock Picks of Barclays

The theme in power continues to be away from those with heavy exposure to natural gas, which is a major reason the favorite pick of Barclays in that space is NextEra Energy (NYSE:NEE). They also like AES (NYSE:AES) based on prospects in global infracstructure.

Barclays said, "Margins have been bifurcated, as spark and quark spreads have shown signs of life, as gas plants have been run harder on-peak, resulting in less efficient units setting marginal price. Dark spreads, however, have been down on the front end of the curve, and very slightly positive on the back end. In this mixed backdrop, power stocks did very little on an absolute basis in 4Q10, although the group showed some predictable strength going into the last 2 weeks of the year as investors positioned for a more pro-cyclical opening to 2011 trading. We believe the short-term move up in prices and heat rates is a token of the winter peak, and not a sign of longer-term repair in the power markets. With natural gas expected to be weak throughout 2011, we still don't believe the rally is real, and would position in stocks that are more hedged against the prolonged weakness in gas, or that represent a way to play global infrastructure growth, rather than being tied to the US markets.

"We would be positioned in power stocks that have relatively less exposure to natural gas and power prices at the moment - with our favorite being NextEra Energy - or stocks with global infrastructure growth prospects such as AES Corp."

NextEra Energy closed Wednesday at $52.34, down $0.41, or 0.78 percent. AES closed at $12.77, up $0.17, or 1.35 percent.