Sunday, October 31, 2010

Duke Energy Corporation (NYSE: DUK) Q4 2010 Analysis

Recent price: 17.65$
P/E Ratio: 35.71
3 month Target Price: 18.10$

Company Description
Duke Energy makes life better for millions of people every day by providing electric and gas services in a sustainable way – affordable, reliable and clean.

They are one of the largest electric power companies in the United States, supplying and delivering energy to approximately 4 million U.S. customers. They have approximately 35,000 megawatts of electric generating capacity in the Carolinas and the Midwest, and natural gas distribution services in Ohio and Kentucky. Our commercial and international businesses own and operate diverse power generation assets in North America and Latin America, including a portfolio of renewable energy assets.
Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange

Confidence Margins
Strong resistance  $18.75 (+6%)
Light resistance  $18.10 (+3%)
Light support  $17.50 (-1%)
Strong support  $16.75 (-5% )

This is a stock to hold very shortly since the RSI is getting closer to 70; this means there might be limited upside potential after that.

Entry strategy
For the cautious investor:
Buy the stock for 17.65$ or less.

For the risk-taking trader:
Buy 18$ December out of the money call options for about 19$ a contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 18.10$, or keep it until about 18.75$ if you are very bullish.

For the risk-taking trader:
These options are currently undervalued and they should greatly appreciate following a positive move of the stock.
If the resulting price is satisfying, sell the call options as an up price movement happens.

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