Price To Book: 1.9
Earnings Payout Percentage: 107%
Background: Southern Energy acquires, develops, builds, owns and operates power production and delivery facilities and provides energy-related services to utilities and industrial companies. Southern Energy businesses include independent power projects, integrated utilities, a distribution company, and energy trading. The company has a $36 billion market cap and trades an average of 5.6 million shares on a typical day.
This stock currently has an annualized dividend of $2.03, yielding 5%. At first glance, you may wonder why I'm including a company that is paying more than 100% of earnings in dividends. Normally that's a giant bright red neon sign that says "danger," but in this case it's the difference between trailing and forward earnings. Next year, earnings are expected to exceed dividends by at least 70 cents.
Shares declined 3.5% in the last month and down about 20% from last spring. From a technical analysis point of view, the daily chart is bearish, but the monthly chart remains bullish and at an area of support. The average analyst target price for Southern is $43.68. I place the one year price target at $45, and after adding in a 5% yield, you have the makings for southern hospitality at its finest.
Currently, the 2.7% short interest based on the float is inconsequential and not a large concern.
At the time of publication, Weinstein had no positions in securities mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.