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This week we are looking into sectors that have not been part of the stock rally over the last six months. Utilities is such a sector and within it, we have found a solid company that is cheap compared to its competitors, and has a better outlook as it moves to diversify as energy consumption changes. Our Bearish pick is a high-end retailer that has had a nice run in the rally since last March, but a miss in their last quarterly results and exposure to credit defaults have made it a “Sell” target for more than one analyst.
With this week’s unemployment report suggesting that consumer confidence will most likely remain low, more lower-than-expected results are the reality for this Bear pick. |
 FPL Group (FPL) -
Utility stocks have trailed the S&P in 2009 but are starting to look up as the economy sees some recovery. If the stock market is truly over-bought right now, as some analysts think, FLP becomes even more attractive. It is already considered cheap as its stock price is close to the lows of March 2009. FPL is not just a play on electricity, it has been moving aggressively to alternative sources like wind, solar and nuclear. They are still a big player in natural gas and electricity. The company’s cash flow is solid and it also pays a good dividend.
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 Nordstrom Inc (JWN) -
Retailers have been hurting from the lack of consumer confidence for a year now, but big ticket or higher end retailers are feeling the pinch even more. Nordstrom posted another quarter of lower-than-expected profits as their credit card delinquencies rose to 5.3 % in the fourth quarter, mostly due to its high exposure to Californian consumers. Mike Koppel, Nordstrom’s CFO has come out and admitted that significant improvement is doubtful.
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