Otter Tail (OTTR) is a provider of electric utility services in Minnesota, North Dakota and South Dakota, and it’s a diversified enterprise that also has manufacturing and plastics businesses. After months of price consolidation, Otter Tail stock edged above a buy point Friday.
The company is made up of five divisions including an electric utility, a metal fabricator, a custom plastic parts manufacturer and two PVC pipe manufacturers. Management is focusing on growing the regulated electric utility portion of the business to 70% of overall earnings.
The company explains the utility segment has a more predictable earnings stream, will improve the credit quality and preserve the company’s ability to continue paying dividends. The company pays a 2.5% annualized dividend yield and has paid a dividend since 1938. Otter Tail is looking to the manufacturing and plastics segments for organic growth.
Otter Tail passes all nine criteria on the IBD MarketSmith checklist. The company reported noteworthy quarterly earnings per share growth of 136% for the first quarter, 173% in the December quarter and a less impressive 45% in Q3 of last year. Analysts expect annual EPS growth of 29% in 2022, but then a decline of 37% in 2023.
Otter Tail has a best-possible A rating for SMR, a measure of sales, profit margins and return on equity. Otter has a coveted 99 Composite Rating and a 96 EPS Rating.
It has an Accumulation/Distribution Rating of B, meaning there has been moderate institutional buying over the last 13 weeks.
Others in the same industry group include Chemed (CHE), Seaboard (SEB) and Carlisle (CSL). Their businesses are in various industries, so there’s little to any overlap with Otter Tail.
Otter Tail Stock In Cup With Handle Nearing Buy Point
The stock closed up 2.5% on heavy volume on June 30 to end the quarter. Otter Tail stock formed a cup-with-handle base, and closed Friday above a buy point of 69.02. It’s in buy range to 72.47. Shares have been above the 21-day exponential moving average since June 24 and above the 50-day average too.
The relative strength line hit a new high, a positive sign ahead of a possible breakout.
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