TECO Energy: No Big Change Expected
Ivan Kitov | Nov 22, 2012 02:17AM ET
In this article, we introduce a tentative pricing model for TECO Energy (TE). This is one of many energy related companies in the S&P 500 index. Our pricing model is based on our concept of stock dependence on consumer price index. The intuition is simple and clear, the evolution of a share price is inherently related some goods and services and thus the evolution of their relative prices. For example, it is not easy to ignore the intuition that crude oil has to affect share prices of oil companies. We have reported that such a link exists for Our model of oil price evolution implies a fall to $40 to $60 by 2016. This may induce a fall in energy prices in the long run and the TE price will be on a down ward trend as well. On this long term trend, there should be periods of high fluctuations associated with elevated market volatility. When the actual price is far below the predicted price, one may consider a profitable (in the short run) share purchase. When the actual price is far above the predicted price, it is best time to sell. Currently, the predicted and observed prices are almost equal. No action needed.
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