ITC Turns Hot
ITC Holdings (ITC) ITC Holdings Corp. (ITC Holdings) is in the electricity transmission business. They operate transmission lines in the mid-western US that connect generating stations to local distribution facilities. The Company’s Regulated Operating Subsidiaries earn revenues through tariff rates charged for the use of their electric transmission systems by its customers, which include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. [PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'ITC'" symbolprices="39" div_align="right"]
We bought ITC in June 2015 at $31.80. The shares have reached our $39 target. The rapid rise is due to the company’s announcement that it has put itself up for sale.
We recommend taking the profit because 1) the sale may or may not happen because the price has just risen 20%; 2) interest rates will rise which will have a negative impact on profitability; 3) A sale could take a long time and we can recycle the funds into the next best opportunity.
Purple Chips range is Low: $32 and High $39
HIGH VALUATION IN ITC HOLDINGS AT $38.84 (ITC-US) FULL POSITION
TOTAL RETURN (including dividends): +23.3%,
PURPLE CHIPS TARGET: $39 POSITION SIZE: FULL (5.0%) P/E: 19.3X DIV: 0.75 (1.9%) MKT CAP: $5.9B Debt: $4B RETURN ON CAPITAL: 11.2 EARNINGS YIELD: 5.9% 5 YR EPS Growth rate*:13.4% P/E/G Ratio: 1.5X Current EPS: $2.00 2016 EST.: $2.10 2017 EST.: $2.25
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
