Yes Virginia, Unitil Corp. (UTL) is a utility holding company serving New Hampshire, Massachusetts and Maine, notes Kelley Wright, blue chip investing expert and editor of the dividend-oriented advisory service, Investment Quality Trends.
What? The Dow Jones Utility average is overvalued on a dividend yield basis and the utilities have had one hell of a run. Yeah, I get all that, but the numbers don’t lie.
When you look at the chasm between economic earnings of over $60 per share and reported earnings of $3.30 per share, guess what? The market is vastly underpricing this stock.
At IQ Trends we divide our universe of stocks into four categories. Undervalued is the historically repetitive area of low-price/high-yield and our traditional buy area.
A stock enters a Rising Trend when it has moved 10% above Undervalued and is traditionally our hold area, although we will occasionally dip into this area, such as with UTL, when we think it is a compelling buy.
Historically, UTL is Undervalued at a dividend yield of 4.40%, which based on the current dividend of $1.52 equates to around $35 per share. Trading recently in the mid-$40’s the stock is technically in what we call a Rising Trend, and per our methods we wouldn’t pay over $38.50, but this is one instance where we think you will be just fine.
