In this market investors need to look at every stock through the prism of President Obama’s anti-shareholder polices to avoid getting burned, especially when it comes to utilities. Many of these could buckle under the pressure of the administration's favored cap-and-trade energy plan to reduce carbon emissions, mentioned in last night’s State of the Union, if it passes Congress.
While the utilities may be in the President’s crosshairs, not all of them are equally in danger. Take Dominion Resources, one of the largest producers and transporters of energy in the country, serving roughly 50 million homes and businesses in the Mid-West, Mid-Atlantic and Northeast. The company just reported this morning.
Under cap-and-trade the worst hit utilities will be the ones with the most coal. Dominion is 45% coal, 42% nuclear, as well as 10% natural gas (a Cramer favorite) and has some wind projects going.
Dominion delivered a solid quarter, and, excluding one-time items, beat Wall Street’s consensus earnings estimate by 3-cents. Also, the company gave its dividend a tiny boost, so now it yields at 4.9%. The stock is down today but is still just 2-points off its 52 week high.
Cramer talked with Tom Ferrell, Chairman and CEO of Dominion Resources, to find out how investors should worry about D and other utilities.
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