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All That Crap About Not Panicking?

Markets were down on Monday, of course; right now the S&P 500 is at 2057, right around where it started the year. In a way, we have no idea what will happen; and in a way, we know exactly what will happen. More importantly, we know that whenever the market finishes going down, it will then go up and make a new high with the variable being how long it takes. By Roger Nusbaum, AdvisorShares ETF Strategist It is still true. As I write this post Monday after the close, there is still a lot of uncertainty on how Greece will precisely play out. Markets were down on Monday, of course; right now the S&P 500 is at 2057, right around where it started the year and is flirting with its 200 day moving average. We have seen this sort of thing many times before, and after this clears up, there will be other big scary events , a term Ken Fisher has used previously. In a way, we have no idea what will happen; and in a way, we know exactly what will happen. As I write this, again on Monday afternoon, we don’t know when the global selling in equities will end (it might already be over by the time this post is published); we don’t know whether or not China, Puerto Rico or anything else will pile on to send markets lower, even into a bear market (this is not a prediction). This could be serious or it could be one of the many big scary events that are quickly forgotten; we don’t know. We do know that the media will overreact. More importantly, we know that whenever the market finishes going down, it will then go up and make a new high, with the variable being how long it takes. The FTSE 100 recently eclipsed a high dating back to 2000; of course the NASDAQ broke its high from 2000 as well. At some point, the Nikkei will break the high from 1989, but again, no one knows when. There are different implications for different types of market participants, but they all revolve around the same things; not panicking and sticking to the strategy you thought would be a good idea when things hit the fan as they occasionally do. People in the accumulation phase need to keep accumulating. While the FTSE did just make a new high from 2000, that index has about doubled since 2009, so someone who kept accumulating should have caught most of that up move with the equity portion of their portfolio. People in the withdrawal phase should be prepared to take defensive action if that is the strategy they laid out for themselves ahead of time, or stand pat if that is the strategy they laid out for themselves ahead of time. A defensive strategy, which is what I believe in doing, offers the opportunity to make it a little easier emotionally to ride out large declines (remember, at this point we have no idea whether a large decline is coming) and standing pat (save for rebalancing) relies on remembering ahead of time that large declines will be uncomfortable, but that they end and then markets recover, with the only variable being how long it takes; repeated for emphasis. I realize none of this is new and at a high level this is something everyone knows, but knowing and doing can be two different things. Hopefully, a reminder is useful. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs visit our website AdvisorShares.com .

My Top Water Utility Stocks For 2015

Summary In this series of articles, I will be reviewing individual industry sectors and selecting my favorite stock picks for 2015. For Part 53, I will be reviewing the Textiles and Apparel sector, taking a look at revenue/earnings growth and the overall financial stability of the companies. Out of this group of stocks, my top picks are Artesian Resource, California Water Service, and SJW. Overview In this series of articles, I will be taking a look at various industry sectors and selecting what I believe will be outperforming stocks for 2015. In Part 1 , I reviewed 47 stocks within the Aerospace and Defense industry sector. For part 53 (the final part of this series), in determining my favorite stocks in this sector for 2015, I will review the following Water Utility stocks: American States Water (NYSE: AWR ) American Water Works (NYSE: AWK ) Aqua America (NYSE: WTR ) Artesian Resources (NASDAQ: ARTNA ) California Water Service Group (NYSE: CWT ) Connecticut Water Service (NASDAQ: CTWS ) Consolidated Water (NASDAQ: CWCO ) Middlesex Water (NASDAQ: MSEX ) SJW (NYSE: SJW ) York Water Company (NASDAQ: YORW ) Step 1 The first step I took to narrow down the list of possible options was to look at the earnings over the past five years of these stocks within the industry sector. I planned on removing any stocks from further review because of their negative earnings growth over the past five years; however, none of the stocks had negative earnings growth. Step 2 I then took the list of remaining stocks and checked the revenue growth of each over the past two years. I am removing any stocks that had flat revenue growth (less than 2%) or a decline in revenue over the past two years. These stocks include: American States Water Aqua America Consolidated Water Step 3 My next move was to examine the trailing PEG ratio of each of the remaining stocks. I removed any stock that had a PEG ratio over 1.5 to focus more specifically on fairly valued/undervalued stocks. These stocks included: Step 4 The next set of data I reviewed was the Fundamental and Value Scores for each of the ten remaining stocks. These scores are calculated by YCharts and I have found them to be very useful when researching investment options. More details on each of the scores can be found here and here . Fundamental Score Value Score American Water Works 5 9 Artesian Resource 8 10 California Water Service 8 10 Connecticut Water Service 8 7 SJW 9 9 York Water 8 9 To determine the best stocks for 2015, I’m only taking into consideration stocks that have values of 8 or higher for both fundamental and value scores. Doing this left me with the following remaining stocks: Artesian Resource California Water Service SJW York Water Step 5 My next step was to look at the book value of each company and to remove any stock that has seen a decrease in its book value over the past five years. However, none of the remaining stocks saw a decline in book value during this time period. Step 6 I then looked at the remaining stocks and only included stocks with earnings yields of 5% or higher in my final analysis. The only stock with a yield below this was York Water. Step 7 My next step was to look closer at each stock remaining that passed all previous criteria and determine whether or not there were any reasons to eliminate them as great stock candidates for 2015. In doing so, I reviewed the financials of each company, the most recent quarterly report transcripts, and searched for any news items that warranted concern. Artesian Resource For its last quarter , the company posted a 6% increase in revenue and an increase in earnings per share from $0.23 to $0.28 compared to the same period last year. Artesian continues to pay a high yielding (just over 4%) and slow growing (16% over the past five years) dividend and should continue to reward income investors moving forward. California Water Service For its last quarter , the company posted a 10% increase in revenue and an increase in earnings per share from a loss of $0.11 to a gain of $0.03 compared to the same period last year. The company was able to see these impressive results through a combination of rate increases, sales to new customers, and revenue decoupling mechanisms/balancing accounts. The company will be challenged by the current drought in California, but I believe that the rate case increase that was authorized will help the California Water continue to see impressive quarterly results moving forward. SJW For its last quarter , the company posted a 14% increase in revenue and an increase in earnings per share from $0.04 to $0.23 compared to the same period last year. SJW is facing the same drought issue as California Water, but rate increases and new customers have helped offset the lower customer water usage the company has seen. While the company is sure to see continued low usage rates, I feel that the company’s strong balance sheet and strategic investments will keep the company performing at a high level even during stressful times. Conclusion Out of this group of stocks, my top picks are Artesian Resource, California Water Service, and SJW. While both California Water and SJW are both dealing with a major drought, I believe that both companies have strong enough cash flow and balance sheets to continue to perform well during this time. Looking at the chart below, you can see that all three companies have performed similar so far this year, with all three of them currently down 3.99%-5.44%, while the S&P has been virtually flat. ARTNA data by YCharts When looking at long term returns, you can see that both Artesian and California Water have performed nearly identical with the market in general, while SJW has performed significantly better. ARTNA Total Return Price data by YCharts Currently, SJW is more attractively valued than both Artesian and California Water based on PE trailing ratios, while Artesian is the more attractively priced stock based on forward PE ratios and price to book value. This isn’t the only area in which all three stocks are similar. If you look at the chart below, you can see that both California Water and SJW have increase their book value more than Artesian over the past five years. ARTNA Book Value (Annual) data by YCharts But if you look at a more longer term view, you can see that Artesian has done a significantly better job of increasing book value over the long run. ARTNA Book Value (Annual) data by YCharts With all three stocks maintaining solid overall financial positions, all three stocks offering decent yields with growing dividends, and all three stocks showing fairly consistent and significant increases in revenue, I believe that these stocks are solid options for both short term and long term investors. As always, I suggest individual investors perform their own research before making any investment decisions. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Dividend Growth Stock Overview: Middlesex Water Company

Summary MSEX provides water and wastewater services to about 450,000 people across New Jersey, Delaware and Pennsylvania. The company has paid dividends since 1912 and increased them since 1973. MSEX has compounded dividends at less than 1.5% for the last decade and less than 2% for the last quarter century. About Middlesex Water Company Middlesex Water Company (NASDAQ: MSEX ) provides water and wastewater services to over 450,000 people across parts of New Jersey, Delaware and Pennsylvania. The company began operating water utility services in New Jersey in 1897, and recently expanded to Delaware in 1992 and Pennsylvania in 2009. The company also received approval to operate in Maryland in 2007, but does not have any business there. Image from Middlesex Water Company’s website . Middlesex Water divides its operations into two business segments – regulated and unregulated. Like most utilities, the company receives most of its revenue and income from its regulated business, providing an average of 88% and 93% of revenues and income from 2012-2014. In 2014, Middlesex’s regulated businesses had revenues of $103.3 million, up 2.6% from 2013, and net income of $17.3 million, up 11.6%. The increase in revenues was due to higher customer demand and rate increases from regulatory agencies. The large net income increase was due to lower expenses from improved performance in the company’s pension plan and fewer water main breaks as compared to 2013. The unregulated business segment – covering Middlesex’s service in Perth Amboy, NJ; Avalon, NJ; and portions of Delaware – had net income of $1.2 million on revenues of $13.8 million, up 9.1% and down 2.1%, respectively. In 2014, Middlesex Water had total revenues of $117.1 million, of which nearly half came from residential customers. The company’s net income was up nearly 11% year-over-year to $18.4 million and EPS were up 9.7% to $1.13. With the annualized dividend payment of 77 cents per share, Middlesex Water has a payout ratio of about 68%. The company trades under the ticker symbol MSEX. Middlesex Water Company’s Dividend and Stock Split History Middlesex Water has grown dividends incredibly slowly – less than 1.5% a year for the last decade. Middlesex Water has paid dividends continuously since 1912 and increased them annually since 1973. The company pays out its quarterly dividends at the beginning of March, June, September, and December. Annual dividend increases are announced around the 20th of October, with the stock going ex-dividend in mid-November. Last November, Middlesex Water announced a 1.3% increase in the quarterly dividend to an annualized payment of 77 cents per share. Middlesex Water should announce its 43rd annual dividend increase in October 2015. Middlesex Water has built a record of steady, but very slow dividend growth. Since 2004, the company has increased its annual dividend by a penny a year, resulting in 5- and 10-year compounded annual dividend growth rates (CADGRs) of 1.4%. Longer term, the dividend growth record is not much better; the 20-year and 25-year CADGRs are 1.9% and 2.0%, respectively. The company has split its stock 4 times since beginning its record of annual dividend growth. 2-for-1 splits occurred in December 1984 and September 1992; a 3-for-2 split occurred in January 2002; and a 4-for-3 split occurred in November 2003. Prior to 1973, Middlesex Water split its stock 5-for-1 in October 1927; 3-for-2 in October 1959; and 2-for-1 in December 1967. A single share of Middlesex Water’s stock purchased in 1973 would have split into 8 shares. Over the 5 years ending on December 31, 2014, Middlesex Water’s stock appreciated at an annualized rate of 9.52%, from a split-adjusted $14.39 to $22.67. This underperformed the 13.0% annualized return of the S&P 500 during this time. Middlesex Water Company’s Direct Purchase and Dividend Reinvestment Plans Middlesex Water Company has both direct purchase and dividend reinvestment plans. You do not need to be a current investor to participate. New investors must purchase at least $500 of Middlesex Water’s stock and are required to reinvest dividends on at least 10 shares of stock. Subsequent purchases of stock must be at least $25. The fee structure of the plan is favorable for investors, with the company picking up all fees on stock purchases. When you sell your shares, you’ll pay a sales commission of $15 plus associated brokerage fees. All fees are deducted from the sales proceeds. Helpful Links Middlesex Water Company’s Investor Relations Website Current quote and financial summary for Middlesex Water Company (finviz.com) Information on the direct purchase and dividend reinvestment plans for Middlesex Water Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.