Rebalance Now, Buy Evergy Post Merger

By Michael Hooper

It's a good time to rebalance your stock portfolio while U.S. stock markets are near record highs.

I recently sold my losers and bought more of my winners and also entered into some new positions, including Evergy (EVRG), Nintendo (NTDOY), Canopy Growth (CGC), and Turning Point Brands (TPB).

I had purchased an overweight position in Eversource (ES) at 54 per share and then sold at 60.50 per share and used the proceeds to buy other stocks.

I took advantage of the run-up in Canadian cannabis stocks and sold some of my poor performing assets including Emerald Health (EMHTF) and Beleave (BLEVF).

Cannabis assets may be at all time highs but over the next several years may go even higher. So with assets trading at high multiples in the Canadian cannabis market, I took advantage of those prices and sold poor performing shares and then put the money into what I think will be better assets long-term.

Evergy (EVRG) is a combination of Westar Energy in Kansas and Great Plains Energy (Kansas City Light & Power) of Missouri. The merger closed on June 4, 2018. Now the companies are focusing on merger integration and rebalancing the capital structure. 

The merger integration plan includes shutting down some operations in Kansas and Missouri.

Evergy recently issued its second quarter 2018 earnings report.

The company says it has targeted earnings per share growth from $2.43 annually in 2016 to a range $3.25 to $3.57 by 2021, with a compound annual growth rate of 6% to 8%.

Evergy says it's targeted dividend growth is expected to be from $1.84 to a range of $2.19 to $2.32 by 2021, a compound annual growth rate of 6% to 8%.

The company expects to repurchase up to 60 million shares of common stock or 22% outstanding by mid-year 2020.

Think about it, the company is going to remove 1/5th of all shares from the public. That Buy-Back and the projected growth in earnings should drive the Evergy share price higher.

Financially, the merger of Westar and Great Plains Energy will be profitable for shareholders overtime. Most of the job cuts are coming through attrition, when people retire the company is not replacing those people. Some people are getting buyout packages as well but not most of the reductions in staff.

I don't want to be left behind on this. So I picked up some EVRG shares at $55.31.