Utility stocks are sometimes overlooked but they hold a treasure of wealth for those who know how to find the right stocks to invest in. These two utility stocks are very bullish and offer a chance at long-term investments and option investing. Take a look.
American States Water Company (AWR)
American States Water Company, through its subsidiaries, provides water, electric, and contracted services in the United States. The company involves in the purchase, production, and distribution of water in 75 communities of 10 counties in the State of California; and distributes electricity in various San Bernardino Mountain communities. It also provides water and wastewater services, including the operation, maintenance, renewal, and replacement of the water and wastewater systems. As of December 31, 2010, it served 255,562 water customers and 23,257 electric customers; and offered services to 13,468 customers located in the in the town of Fountain Hills, Arizona, and a portion of the City of Scottsdale, Arizona.
AWR is trading at 35.05 and has plenty of profit movement left for its investors. Analysts have given it a median target of 40.00. Not only is AWR very bullish currently, it had quite a nice year in 2011 for growth. In early November it announced its third-quarter revenue and earnings. Income was up to $15.6 million from $6 million the previous year while EPS came in at $.83. This is up from $.36 the year before. So it has grown quite a bit and continues to grow in value as we write.
Long-term investors looking to enter can do one of two things, wait for a pull back and a bounce off the lower trend line or look to catch a break out above the upper trend line on increased volume. As it wedges together it will eventually have to break out and we believe it will be on the upside. For option traders-- use the 40.00 median market at as a strategic longer-term option investment. The June 2012 '40' is a good entry point to hold. (Priced at $.45) It will make a good hold for resale as the year opens up.
Progress Energy Inc (PGN)
Progress Energy, Inc., a utility holding company, engages in the generation, transmission, distribution, and sale of electricity in North Carolina, South Carolina, and Florida. It uses coal, oil, hydroelectric, natural gas, and nuclear power to generate electricity. The company also engages in various alternative energy projects to generate electricity from swine waste and other plant or animal sources, biomass, solar, hydrogen, and landfill-gas technologies.
Trading at 56.05, analysts have given PGN a high target of 57.00 for 2012, so it has surpassed all expectations so far. This is the sign of a strong stock. Insider Monkey posted an article on Seeking Alpha on High Dividend stocks in 2011. The article states: "Historically, high-dividend stocks provided better returns than the market." This has held true for PGN with a high dividend yield of 4.43%. We believe there is still strong bullish life in PGN for a savvy investor to make good money.
Investing in PGN now for 2012 would be a good move to capture another 10% rise. Options can play another great strategy but we would buy one month at a time. January 2012 '60' (Priced at $.30) is inexpensive and looks like a good play for a resale as it inches closer. To make a play for February wait until we move more into the second week of January and access the strength of the trend then.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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