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JimVanMeerten (56.80)

Southern Co - Growth plu 5% dividend



May 11, 2011 – Comments (0) | RELATED TICKERS: SO

One of the best managed utilities in the southeast in Southern Company (SO) headquartered in Atlanta, GA.  I used to be an internal auditor for the company so I got to see that first hand.  Southern has always had a very good relationship with the rate regulators and over the years has been able to get justifiable rate increases to help properly fund operations and expansions.  Georgia Power its largest subsidiary recent received as timely rate increases and will soon.  What brought the stock to my notice was when I was using Barchartto screen for S&P 500 stocks hitting the most frequent highs in the last month.  The current price momentum plus a 5.00% dividend is hard to ignore.

Southern Company (SO), through its subsidiaries, operates as a utility company that provides electric service in the southeastern United States. The company generates, transmits, and distributes electricity through coal, nuclear, oil and gas, and hydro resources. It offers electric service primarily in Alabama, Georgia, Florida, and Mississippi; and serves approximately 4.4 million retail customers with approximately 42,000 megawatts of generating capacity. Southern Company also constructs, acquires, owns, and manages generation assets and sells electricity in the wholesale market. Its transmission assets include 27,000 miles of transmission lines and 3,400 substations. The company also provides digital wireless communications, such as push to talk, cellular service, text messaging, wireless Internet access, and wireless data to approximately 300,000 subscribers in the southeast; and wholesale fiber optic solutions to telecommunication providers under the name Southern Telecom. The company was founded in 1945 and is headquartered in Atlanta, Georgia.

Factors to consider:

Technical Factors:

1 - 96% Barchart technical buy signal

2 - Trend Spotter buy signal

3 - Above its 20, 50 and 100 day moving average

4 - 16 new highs and up 6.56% in the last month

5 - Relative Strength Index 72.35% and rising

6 - Trades around 39.88 with a 50 day moving average of 37.58

Fundamental Factors:

1 - Wall Street brokerage analysts have released 5 strong buy and 16 hold recommendations for their clients

2 - This a core long term holding on most model income portfolios

3 - Even Value Line gives the company an A for financial strength and a 100 score for both price stability and earning predictability

4 - Brokerage analysts project a revenue increase of 2.90% this year and 1.80% next year

5 - Earnings are forecast to increase by 6.30% this year, another 7.10% next year and 5.51% annually for the next 5 years

6 - The 5.00% dividend can be expected to not only be paid but also increase over time

General Investor Sentiment:

1 - Motley Fool attracts mainly growth investors but 1,168 readers follow this stock

2 - CAPS members vote 863 to 50 that the stocks price will beat the market

3 - The more experienced All Stars agree 248 to 7

Summary:  Southern Company (SO) is a well run electric utility in the fast growing southeastern US that has enjoyed a very favorable regulatory environment for a long time, and that is not expected to change.  Conservative growth and income investors should consider this issue as a core holding.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs on  in his daily blog -- Barchart Portfolio Blogs.

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