Bob Mowry's  Instablog

On a day that saw a 9.25% natural gas ETF gain, (up 41.4 cents to $4.249 per million btu's) many natural gas distributors saw minimal gains. With Piedmont Natural Gas near 52-week lows, the market has already calculated the weak natural gas prices into the stock price, poising the bounce in the economy in the years to come to allow gas prices to similarly trend upwards. Historically utility stocks have been dividend cash&nbs... as such the eye of these corporate boards are keenly affixed on maintaing shareholder value by maintaining these high dividends. Investors strapped for cash flock to high dividend stocks during times of economic turmoil, the likes of which we find ourselves firmly entrenched.

Fundamentals:

PNY: Piedmont Natural Gas Company, Inc., which began operations in 1951, is an energy services company whose principal business is the distribution of natural gas to over one million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including 62,000 customers served by municipalities who are our wholesale customers. 935,724 customers billed by 2008 year end.

Of the top 10 fastest growing cities since 2000 Charlotte is #7 and Raliegh is #9.

97% consolidated assets in regulated utilities by the North Carolina Utilities Commission (NCUC), the Public Service Commission of South Carolina (PSCSC) and the Tennessee Regulatory Authority (TRA) under the umbrella of the Federal Energy Regulatory Commission. Supplies provided by the Midwestern Gas Transmission Company (Midwestern), among others,&nbs... provides access to Canadian and Rocky Mountain gas supplies.

Last conference call highlights (May 26th):

- Dividends since 1956, increases since 1978. 3.8% increased announced for 2009. The solid dividend provides a floor at 20 that hasn't been penetrated for over 5 years.

- 1.9MM cost cutting from last year's Q1 numbers through lower headcounts/maintance. 2.5% of the workforce attrition, from 1870 to 1823.

- 350 basis points borrowing cost lower than last year.

- 1.10 EPS versus 1.12 last year Q1. 2.7% sales growth estimate for Oct 2010.

Technicals:

Near 52-week low. Option pressure pointing to 30 by June expiration, representing a 30% gain; 1251/155 contracts long versus short. 147,000 order started the market day nearly 0.20 higher than Friday's end. Money flow >50 for most of the day, brought down by a 60,000 share sale but quickly rebounding.

Disclosure: Long UNG & PNY