For his second "Executive Decision" segment of his Mad Money program Thursday evening, Jim Cramer spoke with Nick Akins, chairman and CEO of American Electric Power (AEP) , which just delivered another strong quarter.
Akins said after seeing a 6.2% increase in residential load last year as everyone worked from home, this quarter, AEP saw only a 3.1% decline in residential, which means many people are continuing to be productive at home.
AEP operates utilities in nearly a dozen states, including Texas, which was hard hit by freezing weather last winter.
When asked about winter storm Yuri in Texas, Akins reiterated that Texas is a microcosm of what our electric grid needs to fix. The grid needs renewables, but it also needs more resiliency which includes more energy storage and baseload capacity to handle extreme events.
In our last review of AEP on April 26 we wrote that "The charts of AEP are now bullish. Traders could go long AEP on a dip to $86 risking to $81. The $119 area is our price objective.
In the daily bar chart of AEP, below, we can see that prices weakened into June but stayed above our recommended stop of $81. The shares have crossed above and below the popular 50-day moving average line and the 200-day line too.
The On-Balance-Volume (OBV) line only made a slight decline in April and May before turning up again. The OBV line tells us that traders have largely stayed long AEP. The Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line.
In the weekly Japanese candlestick chart of AEP, below, we can see a mostly positive-looking picture. Prices have been testing the 40-week moving average line.
The weekly OBV line has been improving from August 2020 and tells us that buyers of AEP have been more aggressive. The MACD oscillator is above the zero line but the two moving averages that make up this indicator are right on top of each other and could quickly generate a new signal.
In this daily Point and Figure chart of AEP, below, we can see a potential upside price target around $97.
In this weekly Point and Figure chart of AEP, below, we can see a tentative price target of around $118.
Bottom-line strategy: Traders could continue to hold long positions in AEP for the yield and potential price appreciation. The $97 area is our nearest price target.
