June 21, 2010 - New Jersey Resources Corp. (NJR-NYSE) provides retail and wholesale energy services. It operates in two segments, Natural Gas Distribution and Energy Services.

The Energy Services segment offers unregulated wholesale energy services, as well as optimizing natural gas storage and transportation assets in states from the Gulf Coast and Mid-Continent regions to the Appalachian and Northeast regions of the United States and Canada. This segment serves local distribution companies, industrial companies, electric generators, retail aggregators, and other wholesale marketing companies.

In addition, the company's retail and other business operations consist of energy related investments, appliance and installation services, commercial real estate development, and other corporate activities. It owned approximately 83 acres of undeveloped land in Atlantic and Monmouth counties, and a 56,400 square foot office building on 5 acres of land in Monmouth County. The company was founded in 1922 and is based in Wall, New Jersey.

This is what I would call a solid little ($1.5 billion Market Cap) company with a decent dividend. There's nothing exciting here except the fact that earnings have gone up every year but two (2007 and 2009) since 1994 when they were 84 cents a share. Last year earnings per share (eps) were $2.40, down from $2.70. This year 5 analysts have a consensus estimate of $2.47 eps, then $2.65 for 2011. Third quarter results should be out in July (fiscal year ends in September). Expectations are for 18 cents a share, 500% increase over the 3 cents of last year's third period. Fourth period should show 4 cents eps, much better than the negative 12 cents of last year's fourth.

The balance sheet is solid. Cash is $156.1 million, about 4.3 times the level at the beginning of the year. Debt is being paid down. Long term debt is now $436.5 million, and long term debt interest earned is 7.5 times.

The dividend has never been decreased in the last 16 years. Some years it stayed the same but increasing every year since 1995 when it was 68 cents a share. Now it's $1.36 a share, up from $1.24 last year, giving a yield of 3.9%. The dividend takes 51% of earnings to pay. Next payment will be on June 30 for holders of record on June 11.

More numbers: Forward P/E is 13.75. Price to book is 1.96. Book value is $18.62. Operating margin for the last 12 months was 6.48% while the Profit margin was 3.91%. Return on assets was 3.92%. Revenues were $2.38 billion. Total cash per share is $3.78. Current ratio is 1.26. Beta is a very mild .15. There are 41.3 million shares outstanding with a Float of 38.77 million. Institutions own 60.5% of the float.

One more positive attribute for NJR: it's getting into the solar energy business. It's going to offer 130 homeowners a six-kilowatt solar-panel system for $52 a month for 20 years. There are several benefits to the program: it gives NJR lease payments for 20 years; it gives the company residential rebates from New Jersey's Clean Energy Program and a 30% federal investment tax credit. It also creates Solar Renewable Energy Certificates that can be sold to electric companies to meet their renewable energy programs.

Again, there's nothing too exciting here. No catalyst that moves this stock higher in a hurry. But there is a solid dividend, a solid balance sheet, and new programs that should put the company further into the "green". This is one of those stocks that could be the basis for a solid, non-volatile portfolio.

- Company Web site: www.njresources.com

- Ted Allrich