Fortis Stock has provided my portfolio with annual double-digit gains for over a decade. Even the market collapse in 2008 to 2009 still saw an excellent return. This utility company is the most widely held utility stock in Canada. The company is well managed and they continue to grow. Earnings are $2.56 per share with a price to earning ratio of 15 times and price to cash flow of just 6.6 times. Book value is $35.09 and cash flow is $5.74 per share. The dividend is $1.50 for a 3.92% return. The payout ratio is 54.95% leaving plenty of room for the company to continue to expand and payout the dividend for years to come.
Revenue is $6.7 billion and debt to capital is a manageable 54.08%. Fortis has the highest ROWs of all companies in the Electric Utilities industry.
Fortis Stock Upgraded
Following its recent purchase of the utility company, ITC Holdings for US$7 billion which sent the stock plunging over 12% on Feb 9, this past week 6 analysts changed from hold to buy on Fortis and projected strong revenue growth through to 2017.
Presently the stock is trading about midday between its 52 week low of $34.16 and high of $41.58. Analysts estimates have the stock target price at $46 and expect 6% dividend growth through to 2020. Of all analysts following Fortis only 2 rate the stock a hold. The remaining analysts have it rated a buy or strong buy.
With a price target of $46, for 2016, this is an apprecition of 21% on what is a very strong stock.
Fortis Stock 12 Month Chart
The chart for the past 12 months shows a fairly low-level of volatility until Feb 9 of this year when the company announced its purchase plans for ITC Holdings. That sent the stock falling 12.8% on Feb 9 closing at $37.14. The stock continued to fall until it reach a low of $35.53 on Feb 12. Since that low the stock has climbed 7% to close at $38.27 on Friday Feb 19.
However through the sell-off you can see that Fortiss saw the heaviest volume days since November 2014 and investors who were dumping shares should have checked the volume chart. It was evident that following Feb 9, most days were dominated by buyers, more than happy to pick up shares of Fortis at reduced priced.
As well the Accumulation-Distribution Indicator showed clearly that investors were not concerned over the purchase plans for ITC Holdings. The stock has been in steady accumulation for the past 12 months without a hint of distribution of shares.
Dumping Fortis Stock
When stocks like Fortis Stock are dumped by investors in a panic, they should check the Accumulation-Distribution Indicator to see if in fact the majority of investors are dumping their shares as well. This can save investors from taking unnecessary losses. Any nvestor who took time to review the Accumulation-Distribution Indicator on Feb 9 would have seen that investors rather than fleeing the stock, were buying it at lower prices.
Fortis Stock Outlook
For my portfolio I will be making further trades this upcoming week. Fortis is terrific company and the stock is easy to trade. With double-digit annual returns there is a lot to like about Fortis Stock. Placing it on a watch list is definitely an idea investors may want to do and start considering the stock for their own portfolios.
On Monday I will be setting up new price change alerts for Fortis Stock. If the globe is moving toward negative interest rates to stave off recessions, I would have to think that utility companies are going to do well in the coming months and years. Fortis has provided me with 20% annual gain for more than a decade. I see nothing on their balance sheet or in their stock chart, that tells me this kind of result will not continue in 2016.