Friday, May 6, 2011

AGL Resouces may get great total return

I was screening on Barchart for companies having new highs and came across AGL Resources (AGL).

Their principal business is the distribution of natural gas to customers in central, northwest, northeast and southeast Georgia and the Chattanooga, Tennessee area through its natural gas distribution subsidiary. AGL's major service area is the ten county metropolitan Atlanta area.

The company is in a fast growing market and recent rate increase make the future look bright.  With a 4.7% dividend rate this company is projected to give a 14.5% total annual return for the next 5 years.

Factors I like:

Technical Factors:
  • 96% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 8 new highs and up 3.56% in the last month
  • Relative Strength Index 71.25% and rising
  • Trades around 41.96 with a 50 day moving average of 39.58
Fundamental Factors:
  • Recent rate increase give sales better predictability
  • Wall Street brokerage analysts have released 2 strong buy, 1 buy and 5 hold recommendations
  • Revenue is expected to increase by 8.60% this year and another 4.70% next year
  • Earnings are projected to increase by 3.00% this year, 5.10% next year and 5.63% annually for the next 5 years
General Investor Sentiment:
  • CAPS members on Motley Fool vote 194 to 7 that the stock will beat the market
  • The more experienced All Stars vote more confidently with a 74 to 0 vote for the same result
Summary:  AGL already received approval for a rate increase in one of the fastest growing areas in the US. The earnings growth prospects plus a 4.7% dividend while you wait make this a great choice for conservative investors.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs on  Barchart.com  in his daily blog -- Barchart Portfolio Blogs.







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