Investors could very well get a positive charge from Exelon Corp.

Posted Jan 18th 2008 6:59PM by Joseph Lazzaro
Filed under: Stocks to Buy

The market's choppy / consolidating pattern continues, suggesting the need for an additional defensive play or two (or perhaps more). Further, the utilities sector fits the bill, and in this category Exelon Corp. is worth an evaluation.

Via subsidiaries, Exelon Corporation (NYSE: EXC) distributes electricity to 5.4 million customers in Northern Illinois (including Chicago) and southeastern Pennsylvania (including Philadelphia). EXC has 25.5 million megawatts of generating capacity and is also involved in wholesale energy sales/marketing. The company also has 480,000 natural gas customers.

Further, analysts really like Exelon's non-regulated utility operations, which should boost revenue performance in the immediate years ahead. A rate compromise agreement passed by the State of Illinois also removes a potential cloud from the company's revenue picture. The Reuters FY 2007/FY 2008 EPS consensus estimates for EXC are $4.32 to $4.40.

The risks? Analysts are keeping an eye on wholesale power margins, which have proven to be volatile in the past decade.

The First Call mean rating for EXC is: Buy [18 firms]. Mean 2008 target: $90.00 [high: $100, low: $80].

Stock Analysis: Exelon Corp. is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from EXC's shares. Sell/Stop Loss if you were to purchase shares in this company: $46.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: defensive stocks, energy marketing, EXC, Exelon Corp., power generation, utilities