Oversold List Shows Market at Tipping Point

SO data by YCharts

Southern Company (SO)

Background: Southern Company acquires, develops, builds, owns and operates power production and delivery facilities and provides a broad range of energy-related services to utilities and industrial companies. The company was founded in 1945 and is headquartered in Atlanta, Ga. Southern trades an average of 4.1 million shares per day with a marketcap of $39 billion.

52 Week Low: $41.00

Book Value: $21.95

Price To Book: 2.15

Analyst opinion is mixed. Most of the analysts surveyed don't believe a buy or a sell should be made at this point. Right now, Southern has one buy recommendation out of 16 analysts covering the company and 13 holds, while two recommend selling. The average analyst target price for SO is $47.35.

It's common for stocks that are oversold to have analysts distance themselves. Interestingly, analysts will often downgrade a company at or near the bottom (sad, but true).

The moving averages don't appear intensely negative. The 60- and 90-day averages remain above the 200-day (bullish), although the current price is below the 200-day moving average (bearish). Watch for the price to trade higher above the 200-day near $45.65 as a bullish indication.

Southern is expected to make about $2.65 this year based on the same analysts who are not in agreement with the company prospects. If correct, the price-to-earnings ratio is 17. Granted a 17 isn't cheap, but the yield is now over 4%.

Investors are receiving $1.96 in dividends for a -- did I mention? -- yield of 4.4%. Examining the past dividend history is not foolproof, but is at least a reasonable method to help predict the future decisions of the board of directors. In the last three years, the average dividend paid per year was $1.80 per share. Shareholders continue to receive higher dividends. The company's distributions have increased 4.1% a year, during the last five years.

Short sellers are next to impossible to find. Short interest is so low I only include it to demonstrate the smart money is not betting against this company. One percent of the float is short based on the last reported numbers.

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