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Analyst project positive revenue and earnings. Financial strength A-. Great price momentum. Retirement investing is a little different than the Total Return Investing you may have been doing all your life. You used to swing for the fence knowing that time, volatility and regular capital additions to your portfolio would prove the principles of long-term dollar-cost averaging. During retirement and distribution phase of your life, dollar-cost averaging works against you and becomes your worst enemy. Your new goals are: Capital preservation A conservative total return that exceeds your withdrawal rate, taxes and inflation A return that beats the market You fully research a stock and make sure you have the information needed to rationally decide the stock is a good addition to your portfolio. I use a screener provided by Barchart to find stocks that currently are having a positive price momentum and then make sure they fit the criteria listed above. When I screened the Russell 3000 Index stocks today, Aqua America (NYSE: WTR ) was right near the top of the list. Aqua America is one of the largest U.S.-based, publicly traded water utilities and serves nearly 3 million people in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, Indiana and Virginia. First I make sure the stock is outperforming the market. Why would I want to add a stock to my portfolio unless it significantly does better than the market? I use the Value Line Arithmetic Index as my Market benchmark for 2 reasons: 1) it contains 1,700 stocks with a total capitalization of almost 95% of the U.S. stock market, and 2) it is not weighted by capitalization, so the big stocks have the same weighting as the small ones. During the last year, while the market was down 2.79%, WTR gained 17.30%: I like to research the stock’s underlying fundamentals to see if that price momentum is warranted. Market Cap $5.28 Billion P/E 23.26 Dividend yield 2.45% Revenue expected to grow 4.80% this year and another 5.30% next year Earnings are estimated to increase 5.80% this year, an additional 7.10% next year and continue to compound at an annual rate of 5.55% for the next 5 years Financial Strength A- The overall sentiment of the investing community is very important. A stock will not maintain its upward momentum is some of the major players are starting to bail. Wall Street analysts have issued 4 strong buy, 2 buy and 4 hold recommendations on the stock to their clients Institutional investors own about 48.18% of the outstanding shares. During the last year, 170 added to their positions, while 140 decreased their shares for a net gain of 1.998 million shares Insiders decreased their positions with 22 buys and 36 sells but the net result was only down 225,665 shares On TheStreet, Jim Cramer’s staff gave the stock an A+ buy rating I like to follow the individual investors on Motley Fool, and its readers voted 540 to 32 that the stock will beat the market Short sellers have almost doubled their positions from around 2.846 million shares at the beginning of the year to 5.747 million shares recently I use Barchart for technical momentum data and only consider day from the current 6-month period: 100% technical buy signals Trend Spotter buy signal Above its 20-, 50- and 100-day moving averages 9 new highs and up 3.75% in the last month Relative Strength Index 63.29% Barchart computes a technical support level at 29.02 Recently traded at 29.99 with a 50-day moving average of 28.71 I try to compare my stock to the largest 3 stocks in the same sector. In the Water Utility sector, Aqua America gained 17.30% in the last year, while America Water Works (NYSE: AWK ) gained 14.00%, Companhia de Saneamento Basico do Estado De Sao Paulo (NYSE: SBS ) lost 23.21% and American States Water (NYSE: AWR ) gained 22.19%: Additional comparisons: American Water Works Market Cap $10.56 billion P/E 21.82 Dividend yield 2.40% Revenue expected to grow 5.40% this year and another 4.90% next year Earnings estimated to increase 6.50% this year, an additional 7.20% next year and continue to increase at an annual rate of 7.34% for the next 5 years Wall Street analysts issued 4 strong buy, 7 buy and 5 hold recommendations on the stock Financial strength B+ Companhia de Saneamento Basico do Estado de Sao Paulo Market Cap $ 3.02 billion P/E 44.00 Dividend yield 1.94% Revenue expected to decline by 53.50% this year but grow again by 16.50% next year Earnings are estimated to decrease 66.10% this year, increase by 168.40% next year and compound at an annual rate of 12.30% for the next 5 years Wall Street analysts issued 2 buy and 2 hold recommendation on the stock They did not rate the financial strength America States Water Market Cap $1.53 billion P/E 24.19 Dividend yield 2.23% Revenue expected to decline .70% this year, rise again by 4.10% next year Earnings are estimated to increase by 1.30% this year, an additional 6.30% next year and compound at an annual rate of 4.00% for the next 5 years Summary: My opinion is that the 2 best in the sector are WTR and AWR, but I think Aqua America has a slight edge. It has good price momentum, stable revenue and earnings projections, high financial strength and is expected to give investors an annual total return in the 11% range for the next 5 years. Below I have included a chart of the price against the 20-, 50- and 100-day moving averages plus a 14-day high/low turtle chart, which shows recent upward price momentum. If you’re looking for an exit point to protect your gains, the 50-100 Day MACD Oscillator has been a reliable technical trading strategy for this stock. Scalper1 News
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