Fortis’s (TSX:FTS)(NYSE:FTS) stock price fell 5.9% in February in what I can only call opportunity calling, as this utility stock is in the category of stocks that are as defensive as they get. Let’s review why the stock fell and why I believe that Fortis’s performance in February was unjustified.
Coronavirus fears take Fortis’s stock price down in February
No analysis of stock price performance in February would be complete without addressing the elephant in the room: the spread of the coronavirus, which has caused stock markets to get pummeled. But while investors were triggered by coronavirus fears, these fears compounded on fears that were already present in an increasingly nervous investor population, as one of the most spectacular bull markets in history continued its rise.
Coronavirus fears sent stock markets tumbling in February, and indices such as the S&P/TSX Composite Index was sent into correction territory, falling 6.1%. Today, we are still in the throes of the coronavirus scare, with cases of coronavirus spreading around the world, so we cannot rule out more bad days for stock markets.
Today, we are left standing in the glow of a silver lining. Because I see stock price weakness that is based on coronavirus fears as setting up what may be one of those rare chances for investors to buy quality companies at cheaper, more attractive stock prices, which is why I’m working on identifying stocks to buy.
With the funding issue cleared, Fortis stock is a top dividend stock to own
If you recall, Fortis recently cleared up a major issue that was acting as a major overhang on Fortis’s stock price. A $1.5 billion equity issue laid all funding concerns to rest and set Fortis stock up for some well-deserved outperformance. Fortis is a top dividend stock that has many attributes that make it a stock to buy on weakness. It is a defensive stock, a reliable dividend-growth stock, and a long-term stock that is here to stay for years to come.
Fortis stock declines despite better-than-expected quarterly results
In February, as in most months, we had two notable forces that were impacting Fortis’s stock price: the macro forces and the company-specific forces. We talked about the macro forces, which relates mostly to the sell-off due to coronavirus fears. On the flip side, company-specific forces were supporting the stock, as better-than-expected quarterly results demonstrated the company’s unmatched quality and reliability.
The latest quarterly results came in above expectations, as Fortis continued to benefit from its strong base of quality gas and electric assets. Looking ahead, the company also has strong growth opportunities that are being driven by regulated investments in grid modernization, clean energy, and the emergence of LNG infrastructure.
Foolish final thoughts
In closing, I would like to remind Foolish investors of our belief in holding great businesses for the long term. While this belief remains intact, we are also aware that sometimes, short-term stock price movements create opportunities to create wealth. By blending this long-term focus with a keen eye for short-term stock mispricings, we can use both strategies in harmony, and our quest for financial freedom can be fulfilled.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Karen Thomas has no position in any of the stocks mentioned.