Wed, 25 Feb 2015
Wide-moat Dominion Resources is slightly overvalued at present, but with strong earnings growth potential and a reliable management team, it's a stock that investors should keep an eye on.
Travis Miller: For investors looking for a high-quality all-in-one utilities investment, we think you should watch for Dominion Resources (D). This is our most recent wide-moat utility and one of three wide-moat utilities we cover.
About 50% of its earnings by 2019, we think, will come from wide-moat businesses, such as electric transmission, oil and gas pipelines, and--what we are most excited about--the Cove Point LNG facility. This is the only LNG facility on the East Coast, and it will take advantage of the shale gas that's available to ship overseas.
The stock right now yields 3.5%. It is slightly overvalued, but we think it is worth putting on your watchlist. We see 6.5% earnings growth for the next five years, and it's a management team that we have a lot of confidence in, [which is why we have given it] an Exemplary stewardship rating.