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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (34286)5/5/2009 9:57:32 PM
From: Spekulatius  Read Replies (1) of 78814
 
Gas utility SWX - bought two batches today at 19.8$

While P/E is not that low (they did have some extraordinary items that reduced profits) normalized profits should be around 1.9$/share. I was attracted to SWX because of
a) defensive nature of business
b) healthy cash flow Low EV/EBITDA around 5.5
c) P/B <0.9
d) good and improving balance sheet (recently increased credit rating from BBB- to BBB)
e) Dividend

I suspect earnings really could take off once the housing and growth in Las Vegas improves. Right now they incur quite a bit of cost to connect houses that are staying empty and hence not consume any gas. Once those subdivisions fill with people, profits should improve, even right now they don't look too bad, considering what I am paying for the shares.
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