By Roger Conrad, Utility Forecaster

My No. 1 rule is to never buy a takeover target you don't want to own if there isn't a deal. The six companies reviewed below meet this criterion.

All six are cheap and small enough for giants to swallow, their balance sheets are solid, dividends are safe and management is investing in long-term growth. Any serious offer will have to be compelling.

Buying Atmos Energy (ATO) would require navigating regulators in the 12 states where it distributes natural gas. None of these jurisdictions, however, are contentious.

The Federal Energy Regulation Commission (FERC) is the biggest potential hurdle. This year the unpredictable commission fined the company $12 million for alleged misconduct at its intrastate Texas pipeline operations.

On its own, however, Atmos is set to grow at least 4% to 5% a year, and the stock sells for just 121% of book value. There's little risk buying Atmos Energy, a perennial value up to $33.

CMS Energy (CMS) has appeal as a reliably growing electric and gas system on track to expand earnings 5% to 7% a year by investing $6.6 billion through 2016. Merging into a financially stronger company would reduce the cost of the needed capital.

FERC approval would be a wild card, depending on who the acquirer is. But relations with Michigan regulators are solid. Buy CMS Energy up to $22.

NiSource (NI) and Williams Companies (WMB) saw their market appeal as pipelines soared this autumn and sector mergers heated up. Both stocks, however, still trade at discounts to likely offers.

Canadian energy giant Enbridge, for example, allegedly offered $28.50 per share for NiSource earlier this year.

Williams is now a pure play on pipelines and energy infrastructure; last month, for example, it bought a privately held system in the Marcellus Shale for $2.5 billion.

NiSource also runs a regulated Indiana electric utility and gas distribution systems in several states. But its growth is energy midstream, exemplified by its under-construction 90-mile dry and wet gas-gathering system in the Utica play in eastern Ohio.

Even at a market cap of $18 billion, Williams is less than half the size of Enterprise Products Partners LP. FERC policy on pipeline deals is unknown.

But Nisource and Williams look set to prosper with or without deals and are buys up to $20 and $30, respectively.

New Jersey regulators effectively killed an attempt by Public Service Enterprise Group (PEG) to merge with Exelon Corp. in the last decade.

But the former's well-run power plant fleet, newly solid relations with Garden State regulators and a three-year capital program of $6.7 billion remain attractive.

So are its prime geographic location and demonstrated ability to cope with abysmal conditions in the wholesale electricity market.

A serious offer would have to be in the mid- to upper 30s. The dividend is safe, generous at nearly 5% and was raised 3.7% last month. Public Service Enterprise is a buy up to 32.

Low wholesale power prices have been offset by sharply declining fuel costs at Calpine Corp. (CPN) at its gas-fired plants. Calpine is in expansion mode, adding a 485-megawatt project in Louisiana last month.

This is not the Calpine of a decade ago, which wound up in bankruptcy court in 2005. New capacity is pre-sold, and there's no debt maturing before June 2014. A successful offer would have to be in the high 20s.

Calpine may never fetch a bid. But it's growing and is a solid buy on its own merits up to 18.

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