Exelon Corporation (EXC) is Wolfey’s Stock Pick of the month for March 2012. Let me tell you some background about Exelon:
Exelon Corp has one of the industry’s largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. It is the largest owner/operator of nuclear plants in the United States. Exelon delivers electricity to approximately 5.4 million customers in northern Illinois via ComEd and southeastern Pennsylvania via PECO, as well as natural gas to approximately 494,000 customers in the Philadelphia area via PECO. Exelon is headquartered in Chicago.
Exelon was the #1 U.S. utility for the second year in a row on Forbes Magazine’s 2011 list of the world’s 2,000 largest, most powerful public companies. Exelon has been the top-ranked electric and gas utility on the FORTUNE 500 for four years running. Exelon was the #1 U.S. electric utility on Platts’ Top 250 Global Energy Companies list in 2011.
Exelon stock has been flat for a long period of time now, and recently it has been trading in the 39 dollar range. Exelon pays a dividend of 2.10 a share, which equates to a 5.4% yield. People are bearish on Exelon based on depressed generation prices and projected EPS decreases for 2012 and 2013.
Projected Earnings for Exelon are as follows:
2012 EPS: $3.02
2013 EPS: $2.86
These are significant decreases even over 2011 EPS, which was $4.16. However, there is light at the end of the tunnel for Exelon. Exelon is merging with Constellation Energy, and Constellation brings a diversified portfolio to Exelon. Exelon believes with Constellation in the mix, they can also produce a combined cost savings of 5% by 2013, which would move 2013’s EPS into the 3 dollar a share range, even after the dilution of stock from the merger.
Exelon provides one of the strongest dividends for utility companies, with a 5.4% yield. They also have a solid PE ratio of 10.38, with a forward PE of just over 13. I am in on Exelon and I believe it’s a solid utility with growth potential for your portfolio.
Read my article here if you want more in depth about my thoughts on Exelon. Hope you can benefit from this stock pick of the month!
I am long EXC.
Originally posted March 10, 2012
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