Franklin Universal Trust (NYSE:FT)

CAPS Rating: No stars

Closed-end investment company.

Recs

1
Player Avatar ResearchLover (21.71) Submitted: 4/15/2008 5:38:00 PM : Outperform Start Price: $5.77 FT Score: +9.04

I like utilities for stability premiums they should start to accrue as market volatility in general seems neverending, where the price of FT is rock solid.. Add to that an active manager, balancing utility-issued bonds with fuel/resources and utility equity, and the risk here is that the manager doesn't rebalance from utility debt to utility equity before existing corporate paper prices go up with the first rate increases by the fed, sometime in late 08 or 2009.

See the breakdown at http://biz.yahoo.com/bw/080331/20080331006699.html?.v=1

Mind you, this one will earn me significant points only by maintaining its price when the S&P dips, which seems to say it is a good alternative to a cash position to move in and out of as one tries to time the market. Finally, with regards to corporate bond exposure, I don't see much of a risk for utilities not being able to pay off their debt, particularly relative to paper from other sectors/industries, keeping prices predictably high, or if you prefer, at least stable.

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