In a third "Executive Decision" segment, Jim Cramer checked in with Nick Akins, chairman and president and CEO of American Electric Power (AEP) , the utility with a 3.6% dividend yield. Akins said AEP has a solid plan to grow earnings 5% to 7% for the foreseeable future, and their 8.1% dividend increase is a sign of confidence in their business.
Akins said that this quarter they did see some slowing in the growth of residential and commercial applications. He attributed the weakness to a strong dollar and tariffs starting to take hold. Akins said he doesn't see a return to coal-based power plants. He said utilities are broadening their investments to include natural gas, as well as renewable sources and also their transmission infrastructure. Show me the charts!
In this daily bar chart of AEP, below, we can see that prices have made a "fits and starts" rally from June. Prices are above the rising 50-day moving average line and above the bottoming 200-day line.
The daily On-Balance-Volume (OBV) line shows a rise from June to confirm the price advance.
The Moving Average Convergence Divergence (MACD) oscillator recently moved above the zero line for a buy signal.
In this three-year weekly bar chart of AEP, below, we can see that prices are above the 40-week moving average line whose slope just turned positive.
The weekly OBV has generally moved with the price action and the MACD oscillator is bullish on this longer time frame.
In this Point and Figure chart of AEP, below, we can see an upside price target of $87.67.
Bottom line strategy: Traders and investors could approach AEP from the long side, risking below $69 with $88 as an upside price target.