It goes without saying that I favor the electric power generation sector, and among them, fewer are steadier than Connecticut-based Northeast Utilities (NU), hence I'm reiterating my buy rating for the company, first recommended on May 6, 2009 at a price of $21.48. Don't look for mega revenue growth or gargantuan customer gains with NU, just predictable, steady earnings growth, evenly split between the company's generating/distribution business and its transmission business; look for the company's transmission sector to play an increasing role in revenue growth, moving forward. NU serves about 1.9 million customers, primarily in Connecticut, but also in New Hampshire and Massachusetts.
A 95-cent annual dividend adds to the positive story. The First Call FY2009/FY2010 EPS estimates for NU are $1.84 to $1.92.
And talk about safety and predictability: During the depths of the stock market's low in March, NU dropped . . . to about $18.90 -- hardly a price to fret over.
Stock Analysis: Northeast Utilities is a low-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in NU now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your NU position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $13.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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