It goes without saying that I favor the power generation sector, and operators in Florida, in particular. The Sunshine State may be down but it's hardly out, and with above in mind Teco Energy (NYSE: TE) is worth a review.
Teco Energy is a holding company for several energy plays, including Tampa Electric, and Peoples Gas System.
With a P/E of 16, Teco is not cheap, but here the argument is driven by the Florida market. Teco will continue to invest in the Tampa Electric and Peoples Gas operations and await the return of increasing household formation and robust migration to Florida. The FY2009/FY2010 EPS estimates for TE are $1.06 to $1.22.
Meanwhile, the company remains focused on reducing debt and retaining its investment grade status -- no minor qualification in today's more-demanding credit markets. Teco's chart is a little overbought, short-term, so more-cautious investors should wait for a $1 pull-back but keep in mind TE may not retreat to that level.
Stock Analysis: Teco Energy is a moderate-risk stock. Consider buying a 50% position in TE 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 75% of your TE position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $6.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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