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Tuesday, 06/29/2004

Revenues and Resources
By Nich Sheldon
EQT - Equitable Resources Inc

Company Description

Equitable Resources is an integrated energy company with emphasis on Appalachian area natural gas supply, natural gas transmission and distribution, and leading-edge energy management services for customers throughout the United States.

[Source: Company Press Release]

Reasons to Invest:

Looking for a Drip with solid quarterly performance? Then I believe that I have the DRIP for you. Equitable Resources Inc (NYSE:EQT) cashed in the first quarter of 04 with revenues up 17 percent to $400.4 million. Their net income (before an accounting change grew by 9% to $70.1 million. Did I mention their stock just blew the top off of its proverbial glass ceiling (July 02 regression channel), and set a new all time high in today's trading session?

EQT is forecasting an earnings per share (EPS) growth rate of 16.41 percent over the next year, 19.06 percent over the next three years, and 28.42 percent over the next five years. This is one of the highest EPS increases I have ever seen forecasted for any of the DRIP's that I have recommended over the past year. Think about it, if the company feels that their EPS is going to increase by this much in the coming years, they are obviously expecting good things to come in their near future, which means more profitability for them and more capital for us.

Their annual dividend is $1.52 per share owned, which tabulates out to a 2.98 percent dividend yield. This means that we are guaranteed approximately three percent of our investment year over year. Over the next 12 months the company expects a dividend growth rate of 44.78 percent (BIG GRIN). Over the next three years they expect a growth rate of 18.03 percent, and 10.46 percent over the next five years.

Just a few weeks ago (June 16th) Banc of America Sec initiated their coverage of EQT with a Buy rating. As of right now three brokers are covering this stock with a Strong Buy rating, while three other brokers are recommending a Buy rating, and four others are suggesting that traders hold the stock. The important thing to note is that no one is recommending a Sell or Strong Sell rating on Equitable Resources.

From a technical standpoint EQT is fundamentally solid. As mentioned before the stock has been surfing through a July 2002 regression channel with ease. In fact the past 12 out of 14 sessions have closed in positive territory, setting higher highs along the way.

As is, the chart looks extremely overextended and profit taking should occur over the next few weeks. Keeping this in mind, you might want to wait until short-term traders seek their profits, which will dip the stocks price down, providing a better entry point for you. I would like to see a pull back into the channel around $48.50. Should this occur, this would mean that the simple 10-DMA would have to be broken, and as is the stock has used this level as support for higher highs (daily chart - short term trend).

The weekly chart on EQT looks phenomenal, as the MACD indicator has been on a bullish rampage since April of 04. The Stochastics indicator has been consolidating for the past few months, yet it remains in overbought territory. While the Stochastics indicator has been in overbought territory it is to be expected since the stock has been outperforming 13 out of the past 15 weeks. Another good sign is the fact that the 10-DMA has rested over the 20-DMA since October of last year.

The monthly chart looks the same as the weekly chart. The MACD is showing strong bullishness, while the stochastics indicator looks close to a bearish crossover - yet has been consolidating for quite some time now in overbought territory. The 10-DMA is well above the 20-DMA, and is showing signs of increasing this gap, which means there is an even better chance for profitability on this dividend investment.

The point and figure revised bullish price objective of 51.00 has been met, however, I believe that we could see this price objective being revised again, as the chart pattern notes the stock on a ascending triple top breakout.

Before I cut out, I would like to leave you with one final thought... Trading is a lot like a sprained ankle... GRIN. You never know how many muscles have to work in conjunction with one another in order to take one measly step until you twist, sprain, or even break your ankle. Moreover, you don't really care what muscles make up your foot, until your hobbling down a few flights of stairs with ace bandages trailing closely behind, and every step you take has you grinding your teeth even harder than the step before. You see there are hundreds of muscles that make up your foot alone (Don't quote me on that), just like there can be hundreds of indicators that make or break a stock trend. Some traders don't really care what those indicators are, and some just don't have the time to do the research in their recreational time, but I assure you if the trade goes bad, they are quick to do the research to find out why. I'll be the first to admit that I tend to treat trading like my portfolio is already sprained/broken. I like to do the analysis, I like to do the research, shoot - sometimes I like to take a stab in the dark, even when the fundamentals aren't all in positive territory. The fact remains the same, if you don't know what the indicators are saying your going to be hobbling around quite a few more red trades than green trades until eventually your crutches and risk capital have dwindled down to square one. All I am saying is that it is just as important to invest your time into your research of any given stock, as it is to invest your money in them.

This ends another exciting episode of the DripAdvisor.com Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the DripAdvisor.com limelight.

Until Next Week,
Nich Sheldon
Editor
www.dripadvisor.com

Broker Recommendations

Strong Buy         3
Buy                3
Hold               4
Sell               0
Strong Sell        0

Brokers Covering  10


DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $25-$5,000/month


Reinvestment Fees - 
Dividend investment fees: $0.00
Cash investment fees: $0.00
Auto reinvestment fees: N/A


Transfer Agent:
ChaseMellon
800-589-9026


Corporate Headquarters:
Equitable Resources Inc
One Oxford Centre, Suite 3300
Pittsburgh, PA 15219
Phone: (412) 553-5700
Fax: (412) 553-5757



 
 

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