PG&E Corporation (NYSE: PCG) is
an energy-based holding company, serving some 15 million northern and central California residents through subsidiary Pacific Gas and Electric Company. The firm owns and operates electricity generation facilities, over 150,000 miles of electric lines, nearly 50,000 miles of natural gas pipelines, and underground natural gas storage fields. Competitors include American Electric Power (NYSE: AEP) and Edison International (NYSE: EIX).
Investors were pleased last week, when PG&E said it expected FY08 EPS of $2.90-$3.00 and FY09 EPS of $3.15-$3.25. Analysts had been expecting $2.96 this year and $3.19 next year.
PCG shares
popped through 30-day and 50-day moving average resistance on the news and have since been consolidating the gain in a bullish "pennant" pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with four "strong buys", seven "buys" and four "holds". The PCG P/E ratio (14.46), Price to Sales ratio (1.06), Price to Book ratio (1.62), Price to Cash Flow ratio (5.04) and EPS Growth rate (16.67%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 67% of the outstanding shares. The stock is one of those used to calculate the Dow Jones Composite and the Dow Utilities Index. Over the past 52 weeks, it has traded between $36.26 and $52.17. A stop-loss of $33.90 looks good here. Note that the firm is expected to report Q1 results in early May.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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