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My focus is “Investing Wisely,” e.g. taking advantage of the Bull / Bear Cycles as they occur within the overall marketplace. Integrating modern analytics within these Cycles, means maintaining a process of the thorough fundamental analysis of many Companies and nearly 200 Industry Groups in my universe. I believe that this discipline provides the necessary clarity regarding the rotation that most all Sectors, Industry Groups and Companies goes through – from fundamentally favorable times to unfavorable times and perhaps back again.

The current position of the Electric Utilities Industry Groups is quite low on my ranking of Industry Groups. Therefore, I expect it (EUs) to begin to consolidate during the time frame of my anticipated pullback. Over the short-term, this "Industry Group" does not, qualify as "Currently Favorable" and the shares of its component companies should likely be avoided or perhaps shorted.

In the table below you will see why my approach of valuation offers three rather weak companies that I believe can profitably be shorted in the near-term, however not necessarily now. I have also included two strong companies to compare that likely should be held. Remember to be a bit patient before taking positions.

Valuation / Comparative Analytics Table: Electric Utilities

Sym.

Current

Price

My Target Price

Percent

Above ( + ) or

Below ( - )

Current

Price

“Tweaked”

PEG

P/E

Forward P/E

- - -

Average of Low / High Estimates

Divergence (Percent)

- then -

“Tweaking”

- to get -

My Target Price

Percent

Multiplier

Comments

My Analytics

Weighting:

Fundamental: 40%

Technical: 35% Consensus: 25%

- - -

When my anticipated pullback occurs - Lower Prices are definitely Forecasted for All?

SO

38.3

- 2% - 3%

3.3

15.2

15.2

- 0 -

No downside projection at this time. Long Hold.

D

43.8

- 20% - 25%

3.8

10.4

13.8

+ 132%

Possible Near-Term Candidate for Short Sale.

AEP

36.7

+ 20+ %

3.1

15.0

11.5

+ 77%

No downside projection at this time. Long Hold.

EIX

35.9

- 12% - 18%

3.6

9.9

12.1

+ 122%

Possible Near-Term Candidate for Short Sale.

PEG

32.6

- 0% - 6%

5.4

10.9

11.4

- 105%

Possible Near-Term Candidate for Short Sale.

Notes: Fundamental valuation, data in today’s marketplace, requires that I look at the numbers as being: realistic or creative or “new / funny math”. Because of the valuation data inconsistencies, I have adopted an additional procedure that I call “Tweaking the Results". This procedure is sometimes needed to get me back to “Realistic Valuations”. This procedure requires having an eye on the short and intermediate-term company’s price movement, and is definitely not a part of my technical analysis. My valuations also consider the two-year - forward P/E data. Using this procedure produces very accurate analytics for decisions at bullish and bearish inflection points.

Most financial analysts determine the Price Target Range by estimating a - future earnings per share and then applying a price-to-earnings "multiple", also known as the P/E ratio. I prefer to calculate Price Targets (high / low) for both the current and next fiscal year by applying the stock's present multiple to the average analyst's estimates and follow with some serious "tweaking" of the results.

PEGs: You will note that these Companies are carrying very high PEG Ratios. Normally, that may not mean much but my valuations are already quite clearly negative.

For a current (up to the minute) chart of the Semiconductor Industry Group, click and scroll down here.

My Wrap: So while I believe the General Market may be in for a pullback, the prevailing question from most Investors is: How big will it be? Do I hold my current positions or do I sell? Is there a profitable alternative? Etc. The answer will be obviously quite clear when it (the pullback) is over but an old axiom tells us to be prudent in times like this. You might want to remember that, Cash is always an excellent safe harbor. However, if you are a proactive Investor, taking bearish positions may be also being wise.

This is just another (one of many) “bellwether” Industry Groups to help identify candidates for Buying and candidates for Short Selling as the marketplace “Cycles” from Bull to Bear and back again - over, and over, and over again. Thus, the good news is - we are presented frequent and conservative / low risk opportunities to invest – Long, invest – Short or to simply to hold cash. For me, this is “Investing Wisely.”

Disclosure: No positions

Source: 3 Timely Shorts in Electrical Utilities