$PCG rising from the ashes

You will remember the wild fires which severely hit Northern California back in 2018. As a result of this natural disaster, PG&E Corporation (ticker: $PCG ), a large utility company operating in Northern California with electricity and gas, had to file for bankruptcy and the stock price tanked. Well, this bankruptcy is different than your average one and $PCG is now seeing the light at the end of the tunnel. Time will tell if their plan will pan out but for investors this may be a profitable trade.

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I sent a Buy Alert on May 27th and the stock has shot up 9.37% since then: nice start ! In that alert I have indicated a Stop Loss (SL) of 9.5$ (corresponding to a 14% loss from my buy price of 10.88$) and a Target Price (TP) of 15.5$ (corresponding to a 43 % gain). These are my SL and TP values, based on my risk profile: you should assess what your own risk profile is and determine how tight a leash you want to keep.

I also warned that this is a trade, implying an opportunity based on technical analysis and/or momentum, not an investment. A lot will depend on the decision of the bankruptcy judge which is inherently affected by a certain degree of unpredictability. Utility companies do not tend to be cyclical as people always need to buy electricity and gas, also in times of crisis or a pandemic (though large companies will have reduced their consumption, albeit temporarily), which means that cash continues to pour in. But these large companies tend to be under the radar of politicians: if the wind blows in their favour, the future will look brighter for $PCG ; conversely, if regulators get in their way, further moves to the downside may be experienced by the stock.

Make sure you don’t miss my Buy/Sell/Accumulate/Reduce alerts by subscribing to my website.

I currently own another utility, Italian-headquartered $ENEL.MI . My portfolio also has spicier stocks, like $RACE and $VIAV . If you wish to see the long and short positions in my eToro portfolio, please follow this link.

Enjoy the weekend and invest responsibly !

 

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