Rare is the day I'll sell an electric power generation play, particularly nuclear power. Unlike France, the United States frittered away an opportunity to create a 21st century power generation system 30 years ago, and it will now play catch-up for 20 years, and nuclear will be a part of the solution.Entergy Corp. (NYSE: ETR), the second largest nuclear power generator in the U.S., will be a part of that mix. It is performing as expected, which is why I'm reiterating my Buy rating for the company's shares, first recommended on May 12, 2009 at a price of $74.31.
Look for the stock to continue to recover from spring lows, on solid 7-9% earnings per share growth in FY2009. Due to financial market conditions, it's not certain whether ETR's planned spin-off of it non-utility nuclear assets will occur in 2009, but that does not change the positive story for this superior utility. The First Call FY2009/FY2010 EPS estimates for ETR are $6.54 to $6.95.
Stock Analysis: Entergy is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in ETR 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 NTR position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $47.
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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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