Is PG&E a Worthwhile Investment?

With shares of PG&E (NYSE:PCG) trading around $41, is PCG an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

PG&E is a holding company that conducts its business through Pacific Gas and Electric Co. The utility’s revenues are generated mainly through the sale and delivery of electricity and natural gas to customers. The company served approximately 5.2 million electricity distribution customers and 4.4 million natural gas distribution customers as of December 31. PG&E’s rates for electricity and natural gas utility services are based on its costs of providing service. It is regulated primarily by the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC). In addition, the Nuclear Regulatory Commission oversees the licensing, construction, operation, and decommissioning of the utility’s nuclear generation facilities.

PG&E has agreed to settle with plaintiffs in lawsuits related to the 2010 San Bruno pipeline explosion that killed eight people. The company has already agreed to pay $455 million in settlements reached Friday and is expected to pay another $110 million by the end of the month, the utility company said Monday according to Bloomberg. The company will also face a fine from the California Public Utilities Commission for the safety violations that led to the blast. Some from the commission have suggested a $2.25 billion penalty.

T = Technicals on the Stock Chart Are Strong

PG&E stock has struggled to make significant progress this year. The stock is currently trading near lows for the year, so it may need some time to recover. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, PG&E is trading above its rising key averages, which signal neutral to bullish price action in the near term.

PCG

Source: Thinkorswim