NEW YORK—Shares of two California water utilities jumped Monday after an analyst said their low valuations present a buying opportunity, despite ongoing drought conditions in the state.
Brean Murray Carret & Co. analyst Michael E. Gaugler upgraded both California Water Service Group and SJW Corp. to "Buy" from "Hold" in a research note Monday.
California Water shares rose $1.17, or 3.3 percent, to close at $37.02. The stock has traded between $34.23 and $45.37 during the past 52 weeks. SJW's stock gained $2.07, or 6.4 percent, to $34.67 Monday. During the past 52 weeks, the shares have traded between $27.65 and $43.
Gaugler said recent forecasts from the National Oceanographic and Atmosphere Administration point to improved weather patterns in the first quarter of 2008. He noted that "the shares of both stocks have pulled back substantially in recent days, to a point where we feel current valuations justify taking positions."
The analyst also expects the dividend yields of both shares to limit downside exposure for investors.
Gaugler has set a $44 price target for California Water shares and a $37 price target for SJW shares.
