PPL Corp.'s (NYSE: PPL) stock has meandered since first recommended on May 26, 2009, at a price of $32.15 -- and even broken below the key, 50-day moving average for a considerable period, something that would typically spark a re-evaluation of the investment.
But PPL is in the electric power generation sector, and rare is the day you should sell a power play. Hence, I'm reiterating my Buy rating for PPL Corp.
PPL's business model is solid: steady, if unspectacular growth in its regulated Pennsylvania power market (1.4 million customer), coupled with stronger growth in unregulated (though more risky) power markets. PPL hopes the increased use of power supply contracts of varying duration will lessen that latter risk. The First Call FY2009/FY2010 EPS estimates for PPL are $1.74 to $3.32.
What caused the summer stock swoon? Perhaps jittery, short-term investors, who dumped the stock due to the mild summer weather, which hurt power prices: look for PPL to resume its northward track, soon.
Stock Analysis: PPL Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in PPL 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 PPL position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
- -
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Entrepreneur's Journal: Want to get a piece of the Buffett/Goldman honeypot?
The week in preview: No turkey earnings from Tyson, Hormel, Cracker Barrel ...
Comfort Zone Investing: Intel is saying something ... can you hear it?
Add your comments