Spectra Energy Corp. (SE) — This holding company operates pipelines and facilities for the gathering, processing, transportation, storage and distribution of natural gas and crude oil in the Unites States and Canada.
S&P Capital IQ Equity Research rates SE stock a “Buy” with a 12-month target of $33. Its analysts believe Spectra will benefit from strong volumes of natural gas liquids (NGLs) and ethane, despite recent weakness in prices.
Spectra Energy is working with Kinder Morgan Inc (KMI) to build an ethane pipeline from fractionation plants in the Marcellus region to pipelines and storage facilities along the Gulf Coast. Spectra is also considering the expansion of its crude oil pipeline business, including into the Canadian oil sands, in the long term.
The company currently pays an annual dividend of $1.62 per share for an attractive 6.6% yield. Capital IQ said Spectra’s enormous backlog should help drive increases in distributable cash flow and organic growth.
Technically, SE stock is in a well-defined downtrend with a recovery channel drawn from its December low to the 50-day moving average, now at $25. My proprietary indicator, the Collins-Bollinger Reversal (CBR), flashed a buy signal in December on a high-volume up day. This followed a high-volume down day, which may signal a selling climax. The highest volume in the past 12 months has occurred in the past six weeks, also hinting at the making of a bottom.
Buy SE stock under $25 for a trade to $34 within six months, which would result in a gain of 36%, plus dividends.