Another great week in the stock market, with the S&P 500 growing 2%.
I’m hearing talk of a pullback soon, and that will very likely occur in the near future, but with earnings season upon us I personally think it’ll still be a little while before that happens.
Here is a summary of last week’s stock, and my new one for this week.
Previous Pick: Equitable Holdings, Inc. (EQH)
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EQH had a great week, up 1.12% since the prior week’s close.
You can see from the chart above that its 20 day moving average has been steadily moving upwards with almost no interruption. The price briefly dipped below the line in early January, but since the 7th we’ve seen a clear breakout above the trend.
Remember this chart from last week? Remember I said that the trend was still weak but it seemed to be gaining strength.
Well, it certainly has. The ADX has been steadily increasing since January 7. The ADX represents the strength of the trend. Once it’s above 25, the uptrend will be confirmed.
The average volume has also been going up the last several weeks, which can indicate a strengthening uptrend.
On the fundamental side, EQH is still a Zacks Rank 2 and still has a price target of $29.
Their next earnings report is coming up towards the end of February, so if the trend continues as it is, I’d like to try to hold on until then. Their last earnings surprise was 30.19%, and their average last 4 surprises was 12.4%.
New Pick: PG&E Corp. (PCG)
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Data as of January 17, 2020
- Company name: PG&E Corp.
- Exchange: New York Stock Exchange
- Last close: $13.08
- 52 week low: $3.55 (2019-10-28)
- 52 week high: $25.19 (2019-06-21)
- Employees: 24,000
- sector: Utilities
- Industry: Electric Utilities
- CEO: William D. Johnson
- website: http://www.pgecorp.com
- Peers: XEL, AVA, HE, SRE, D, EIX, WEC, POR, CMS
- Ticker: PCG
- Market cap: 7.0B
- Avg. volume: 19.7M
- Zacks Rank: 2 (Buy)
- YTD change: 20.55%
- Beta: 0.81
- Forward P/E ratio: 3.44
- P/S ratio: 0.41
- PEG ratio: 0.36
- Div. yield: 0.00%
- Next earnings date: 2020-02-13
PG&E Corp. is a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. The firm specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in San Francisco, CA.
Why I Like Them
PCG is a bit of a riskier pick. As you can see above, the price just recently crossed the 20 day moving average as of the 13th. But since then the trend has been growing quickly, suggesting increasing momentum.
But first the fundamentals. PCG is a Zacks Rank #2 (Buy) with a price target of $14.
It’s actually a very good value stock, with a price-to-earnings of just 3.44 compared to its industry’s 20.02. It has a price-to-sales of 0.41, compared to its industry’s 2.34.
Who exactly are they? PG&E Corp. is the parent company of Pacific Gas and Electric Company, California’s largest gas and electric utility. They also operate hydro-electric and nuclear power plants. They’ve invested heavily in growing their infrastructure and have experienced increased cashflow over the past year. They are expected to have a long-term EPS growth of 2.51%.
Over the last year, PCG has seen a gain of 69.9%, far outperforming the S&P 500.
You can see in the ADX chart above that the +DMI and -DMI lines have just crossed on January 10, and now the +DMI line (positive trend) has been rocketing upwards over the past week.
The ADX isn’t high enough to ensure a strong trend yet, but the crossing of the DMI lines is a strong buy signal, not to mention the momentum of +DMI, as well as the moving average as seen above.
The $14 price target would give a 7% gain over the last close, if we reach that mark. Regardless, I believe there is more upside to the stock from here. But to confirm that, I’d like to see the ADX continue to grow as it has been over the last week. I’ll check in next week to let you know its progress.
EQH is experiencing strong growth and I’m trying to hold on to it until its earnings report in February, assuming its trend continues to grow.
PCG is my new pick, and while its trend is relatively new, it seems to have a lot of momentum behind it. But besides that, it is a strong value stock that should continue to grow for the foreseeable future.
As always, I hold positions in all stocks mentioned. I am not a financial advisor and this should not be considered financial advice. You make any investments at your own risk.