Time to scoop up shares of a somewhat under-the-radar natural gas play: Spectra Energy Corp. (NYSE: SE).
Spectra owns and operates a diversified portfolio of natural gas-related energy assets and is primarily a natural gas midstream company. It operates in three natural gas segments: transmission and storage, distribution, and gathering and processing.
Some institutional Investors have exited Spectra's shares recently on likely, continued soft natural gas prices through at least early-FY2010, but the argument here is that the pull-back is a good time to establish a position.
Further, assuming natural gas use and prices resume a more-constant uptrend as the U.S. economic recovery takes hold, SE will trade at a much higher multiple than the current P/E of 13.5. A $30 stock price in 2010 is very attainable. The First Call FY2009/FY2010 EPS estimates for SE are $1.13 to $1.40.
Stock Analysis: Spectra Energy 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 SE now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your SE position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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