By Nigam Arora & Dr. Natasha Arora
The drop in Northern California utility PG&E (PCG) may be a buying opportunity for long term investors who understand that there is slightly higher risk now.
Key Points
Here are the key points:
- PCG serves Northern California.
- There have been no recent fires in Northern California.
- Edison International (EIX) serves Southern California.
- Recent fires have been in EIX territory.
- In an internal report, EIX underestimated the size of the Eaton fire.
- The internal report likely increases EIX’s liability for the fire.
Regulatory Framework
The concern is if EIX’s liability rises, the state of California’s framework that caps liability costs will come under strain. This may indirectly impact PCG.
Undervalued
PCG stock is now undervalued, assuming the following:
- There are no new wildfires in Northern California.
- If California’s regulatory framework comes under strain, the additional money comes from the pockets of EIX shareholders.
Risks
There is slightly more risk in PCG now than before.
Zones
For those who are following the Good Way, the Buy Now rating is *** (To see the locked content, please take a 30 day free trial).
For those following the Best Way, the buy zone to scale in is $*** – $***.
The recommended quantity is ***% – ***%.
The very long term target is $29 – $34.
What To Do Now
Those in the stock may consider continuing to hold. Those not in the stock may consider following the parameters given above.
Note: Signal(s) to enter, add, reduce, exit, hold or change.
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This post was just published on ZYX Buy Change Alert.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
