A key resistance level has formed in the chart of Public Service Enterprise Group (PEG) and a breakout could soon occur.
PEG is the holding company for a regulated utility (PSE&G), a merchant power generation owner (PSEG Power), and an energy investment firm (PSEG Enterprise).
The company has a strong portfolio of regulated and non-regulated utility assets that offer stable earnings and long-term growth potential. PEG has invested over $3.5 billion to promote clean energy in New Jersey.
From a fundamental standpoint, the company had long-term debt of $15 billion as of the end of the quarter, but only $966 million. The company is quite profitable though with a net margin of 19.7%.
Earnings were slightly down last quarter, while revenues beat expectations and were up 3% year over year. Earnings are expected to fall this quarter, but rebound in the next quarter. The stock is fairly valued with a P/E of 15.8.
PEG is up slightly for the year, but has seen recent momentum. This has resulted in a “Strong Buy” rating in our POWR Ratings system, which leads us to its recent price movement.
Take a look at the 1-year chart of PEG below with added notations:
Chart of PEG provided by TradingView
Coming into the March bear market, PEG had stalled at the $62 mark (red) on two separate occasions. Now, over the course of the past several weeks, the stock has rallied up to hit $62 as resistance again. A solid close above that $62 mark will most likely lead to much higher prices for the stock.
The possible long position on the stock would be on a breakout above the $62 resistance level, with a protective stop placed under it.
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PEG shares were trading at $59.30 per share on Tuesday morning, down $0.22 (-0.37%). Year-to-date, PEG has gained 3.23%, versus a 13.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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