This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Despite dip, I'm still bullish on Exelon

Stocks in this article: EXC TEO TOT

By Aaron Pring

Here's a an update on some key holdings in the Buy and Hold portfolio.

The rising tide over the last year has made investments with reasonable valuations scarce. I have no way of knowing for sure, but I believe one exception is Exelon Corp (EXC), which has a price-to-earnings ratio of about 15. In addition to being reasonably valued, this company has a strong position within the utilities sector and a solid balance sheet. A recent dividend cut has put some downward pressure on share prices.

Furthermore, cheap natural gas and other sources of energy have limited the upside potential for the nuclear portion of Exelon's energy portfolio. Additional headwinds for this company have been created by the stringent regulatory environment for nuclear power.

That said, the company in my opinion has one of the strongest positions in the nuclear power market. With a long term view in mind, these recent and temporary problems for the company have created a buying opportunity. While the external market forces may continue to have a negative impact on Exelon's earnings, and hold down share prices for an unknown period, there may come a day when these negatives are either erased or at least limited.

Until the day comes when market forces swing in Exelon's favor, I'm perfectly happy holding a company with a 15% average ROE over the last 5 years, positive earnings and 4%+ dividend yield while waiting.

In my opinion, all indications point toward Telecom Argentina (TEO) being a solid value buy. With a price to earnings ratio slightly over 6 and being priced just over book value, there seems to be limited downside at these levels.

While TEO's current PE ratio is near its historical average, the price-to-book ratio is well below the 10 year average for this company. The valuations are also well below the averages for the telecom industry and general market. Much of the reason for TEO's lowered valuations stems from the political and market risk in Argentina.

Those are factors that could greatly impede the long term success of this company or in the short term put further pressure on share prices. Furthermore, there is a risk that the rather sizeable dividend could be cut should the government strongly suggest (as they have done) that the excess earnings be reinvested into infrastructure.

While those risk factors could prove detrimental, much of that downside appears to already be priced into this stock. As is always my preference, this company has very solid fundamentals to support business operations if economic, political, or other conditions should worsen.

At the time of this writing, TEO has a solid track record for growth, minimal debt, and a solid enough current asset position to cover the cost of operations as needed.

Then there is Total (TOT). While this is one of the least compelling purchases by my portfolio recently, it seems to undervalued (if only slightly) in a generally rising market that has limited value opportunities.

The quick summary is that the fundamentals make current valuations make for a reasonable (if not exceptional) purchase at present prices. The five-year ROE has been around 18% while employing a reasonable amount of debt.

Earnings and dividends have been growing, if only modestly, over the past 10 years. Finally, current valuation ratios are near or slightly below company specific averages and even further below industry and market averages.

DISCLAIMER: The investments discussed are held in client accounts as of January 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.

Aaron Pring

Aaron Pring

I am Vice President of a 25+ year old family-owned commercial construction company. I began investing in high school, then

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs