The sector that stormed through the first half of the year in a big way has come under heavy fire in the second half, as the fear of rising rates has made many yield investors sellers, and with good reason. With many of the stocks trading at high-single-digit premiums to historical levels on a price-to-earnings basis, and also at double-digit levels on a price-to-book comparison, the sector is clearly rich.

In a new research report, the analysts at SunTrust acknowledge the high valuations, but they do believe that five companies in their utility universe could beat current earnings estimates for the third quarter. We focus on the five stocks that remain rated Buy, some of which have the potential to beat estimates.

American Electric Power

This industry leader is also a solid dividend-paying company. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. It ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

Many on Wall Street feel that the stock trades at a discount to its utility peers and they feel it deserves a premium. The company posted solid second-quarter numbers that exceeded consensus expectations. While industrial sales declined for a third year, it remains a stock the analysts favor.

American Electric Power shareholders are paid a solid 3.56% dividend. The SunTrust price objective for the stock is $73, and the Wall Street consensus target price is at $71.03. Shares closed on Monday at $62.97 apiece.

AES

This company is an off-the-radar choice that has solid upside potential from current levels. The AES Corporation (NYSE: AES) owns and operates power plants to generate and sell power to customers, such as utilities, industrial users and other intermediaries. The company also owns and operates utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial and governmental sectors. It also generates and sells electricity to the wholesale market.

AES uses a range of fuels to generate electricity, including natural gas, coal, hydro, wind, energy storage, oil, diesel, petroleum coke, biomass, landfill gas and solar. The company owns and operates a generation portfolio of approximately 29,352 megawatts. It has operations in the United States, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe and Asia.

AES shareholders are paid a 3.76% dividend. The $15 SunTrust price objective compares with the consensus target price posted at $12.98. The stock closed most recently at $11.71 per share.