Avista: A Safe Bet in Utilities

Even with the recent market pull back I still feel that utilities are a safe bet, Avista Corp (AVA) among them. This stock is a position in my Marketocracy New High Fund and followed on my blog Financial Tides.

AVA is a diversified energy company with operations throughout the US. With both regulated and non-regulated energy businesses plus some other non-regulated businesses they seem to be well diversified. Their main utilities divisions distribute electricity from hydroelectric and thermal sources. The non-regulated businesses are in metal fabrication, expense management systems for utilities and real estate.

The electric operations are mainly in the northwest US where they have competition from IdaCorp (IDA) and PG&E (PCG).

The stock is covered by 5 analyst with 3 rating a STRONG BUY and the other 2 a HOLD. The consensus is for sales growth of 5.3% next year and 8.7% over the next 5 years.

On a technical analysis basis BarChart rated the stock an 88% BUY with 11 of 13 TA indicators at BUY and 2 at HOLD. AVA has hit 4 new highs in the last 20 trading sessions and recently 2 in the last 5. The last 65 days has shown a 15.8% price increase.

RECOMMENDATION: BUY around 20.5 with a stop loss at 19.50.

Disclosure: I hold no physical positions in any of the stocks I blog about but hold them in Marketocracy portfolios for accountability.

Comments

[algo41:]

Almost all their business is as a local utility. They do have an energy management business which they are trying to make sufficiently attractive for sale - I can't imagine them getting more than the equivalent of $2.00 a share (that would be great). Other operations are insignificant and seem to lose tiny bits of money. I own AVA, but not because it is diversified.

Sep 25 09:14 AM

[bhensley:]

Seems strange to talk about competition between utilities. There is zero competition for Avista as it is a regulated utility with a monopoly that is secure from any competion within its area of operations.

Sep 25 10:41 PM