Quanta Services: Pull-back is buy opportunity

However, rationality soon returned, as buyers swooped-in, taking shares to their present $20-21 level. It's rational because Quanta, a provider of electric/natural gas/telecom infrastructure services, remains well-positioned to benefit from the upgrade of the nation's electric transmission and distribution grid. Quanta's total order backlog is $5.5 billion, including contract wins with several, major utilities.

The First Call FY2009/FY2010 EPS estimates for PWR are 71 cents to 99 cents. That 99-cent FY2010 EPS estimate will probably prove to be low.

The risks include a double-dip U.S. recession that continues into 2010, which would delay corporate capital spending plans by utilities, telecommunications companies, and cable systems; at this juncture, the risk of a double-dip is a about 10-15%. If you can tolerate moderate risk, a purchase is warranted, as the bias is to the upside with PWR.

Stock Analysis: Quanta Services is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in PWR now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your PWR position before February 2010. Sell/Stop Loss if you were to buy shares in this company: $12.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMA