The Sunshine State may be down but it's hardly out. I'm Reiterating my Buy rating for FPL Group (NYSE: FPL) first recommended on March 3, 2009 at a price of $43.30. Here, the safety-plus-growth story continues. FPL provides electricity to about 4.5 million customers, covering nearly all of Florida's eastern seaboard, including the Gold Coast. The FY2009/FY2010 EPS estimates for FPL are $4.22 to $4.75.
The Florida recession has hurt the state's household formation, and shares slumped, enabling a nice scoop-up of shares in March at about $43. If you missed that entry point, fear not: FPL is headed north. Florida's economy is down, but it's not out, and there's plenty of room for growth. Further, FPL's wind and solar projects, supported by federal stimulus package tax credits, will add to earnings per share. Add a potential rate increase, and a $75-80 target by the end of 2010 is not unreasonable, unless, of course, you don't think Floridians will use air conditioning regularly in the years ahead.
Stock Analysis: FPL Group is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in FPL now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your FPL position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $27.
- -
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
MEMC CEO Forgoes Bonus; Money Will Go to Retrain Workers
