First and foremost, PPL's business model remains 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 risk.
Second, a recovery in electric power demand, and a resumption of household formation growth points to a considerably stronger earnings performance in 2010.
Finally, a $1.38 annual dividend, good for a 4.72% yield at the current roughly $30 stock price, will help you sleep well at night. The First Call FY2010/FY2011 EPS estimates for PPL are $3.31 to $3.22.
Technically, PPL Corp's stock has fallen below the key, 50-day moving average and psychological support at $30. If each continued, they would represent a concern, as the technical story would then be conflict with the fundamental story; however, the calculation here is that the stock price drop is temporary.
2010 Outlook: I view PPL Corp as a long-term play, but if investors are looking to sell PPL within the year, it's probably best to take your profits after it rises to $37-39, if it fails to clear $40.
Stock Analysis: I consider PPL Corp to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in PPL now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my PPL position before April 2010 and I'd put a sell/stop loss at: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.