Several market commentators have focused on AGL as an Utility Stock ready to make a strong move higher; we aren’t as confident.
While the AGL stock price has rallied over 25% during the last 12 months, the source of these continued gains are based on increased earning expectations as the increase in electricity costs roll through to both consumers and business users.
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Further, AGL bulls are relying upon improved fundamentals within the electricity market to support elevated prices.
Our view is that the expected jump in earnings and dividends per share will be hard to attain and that a sideways trading pattern between $20.00 and $22.50 is a more likely outcome over the medium-term.
