Hook / Thesis
New Jersey Resources (NJR) is not a high-flyer, and it does not pretend to be. What it does offer is reliable regulated earnings, a 3.5%+ cash yield and optional upside from storage, transportation and clean-energy investments. That combination makes NJR a candidate for a tactical, mid-term long where the goal is to capture momentum and near-term re-rating while keeping downside controlled.
My recommendation is a mid-term trade: enter near the market at $52.42, use a tight stop at $50.00, and take profit into two targets with a primary mid-term target at $58.00. The rationale: valuation is reasonable (P/E ~16.2, P/B ~2.14), regulated cash flow underpins the dividend, and regulatory moves or outperformance in the company’s unregulated segments can re-rate the stock. Technical momentum is strong but leaves the trade exposed to short-term pullbacks, so position size and the stop are critical.
Business overview - why the market should care
New Jersey Resources is a holding company with a regulated natural gas distribution business (NJNG) at its core, plus a mix of adjacent assets: Storage & Transportation, Energy Services, Clean Energy Ventures and a Home Services unit. The regulated distribution business provides predictable revenue and recovery mechanisms tied to tariffs and rate cases, which is the backbone of earnings consistency. The storage and transportation assets provide optional volatile upside through capacity sales and off-system activity. Clean Energy Ventures gives management a runway to invest in low-carbon projects that could compound value over time if executed well.
Key fundamentals and what they imply
- Market cap: roughly $5.3 billion. That places NJR in the mid-cap utility cohort where yield and stability are priorities for many investors.
- Profitability: EPS is about $3.24 producing a P/E of ~16.2. Return on equity stands at ~13.2%, suggesting management is generating decent returns on capital for a regulated utility.
- Balance sheet and cash flow: debt/equity is elevated at ~1.54, current ratio ~0.83 and quick ratio ~0.58. Free cash flow was negative in the last reported snapshot (-$204.06M), which is consistent with utilities that deploy capital into distribution, storage, and clean-energy projects. Enterprise value sits near $9.09B and EV/EBITDA is about 14.2x.
- Shareholder return: the stock yields ~3.5% and management continues to pay a dividend with an upcoming payable date of 04/01/2026 and ex-dividend on 03/11/2026.
Valuation framing
On a simple earnings multiple basis, NJR is trading at a P/E around 16x, and price-to-book near 2.14x. For a regulated gas distributor with diversified adjacent businesses, those multiples are defensible and not demanding. EV/EBITDA of ~14.2x reflects that investors are paying a premium for regulated cash flows and the optionality in storage/transportation and clean-energy ventures.
Put another way: this is not a deep-value play — the stock is close to its 52-week high of $53.65 — but it's reasonable for an income-oriented, mid-cap utility that can grow rate base modestly and add accretive investments over time. If NJR secures favorable regulatory outcomes and incremental earnings from its nonregulated businesses, the stock has room to run toward the low $60s; if it stumbles on capital spend or regulatory pushback, downside is limited given the dividend and stable regulated cash flow.
Technical context
- The stock sits near its 52-week high of $53.65, and momentum indicators show bullishness: 10‑day SMA is ~$50.39, 20‑day SMA ~$48.96, 50‑day SMA ~$47.35. The 9-day EMA (~$50.90) and 21-day EMA (~$49.38) are both below the current price, which supports a momentum-based entry.
- RSI is elevated (~79.6), indicating short-term overbought conditions and thus a higher risk of a pullback — which is why the stop is relatively tight and the trade is mid-term rather than long-term.
- Short interest and short-volume metrics show intermittent pressure: the most recent days-to-cover sits near 5.68 on some settlement dates and short volume has been meaningful on several recent sessions. That can amplify both squeezes to the upside and volatile reversals.
Catalysts (what could drive this trade)
- Regulatory wins or rate increases: the company’s NJNG unit has active rate filings; approval that raises customer tariffs would directly lift regulated earnings and cash flow. (Rate filing news appeared previously and even a modest per-customer rate increase compounds across the utility).
- Execution in storage and transportation: higher off-system sales, better capacity utilization or asset disposals could release value and bump earnings.
- Clean-energy project milestones: successful deployment or announcements of accretive projects could change investor sentiment and justify multiple expansion.
- Analyst revisions and broker notes: institutional analyst support (for example a reaffirmation from a large house) can reduce risk premium and push multiples higher; JPMorgan's prior positive commentary is instructive in this regard.
Trade plan (actionable)
Entry: Buy at $52.42 (current market price).
Stop: $50.00. This stop sits below the short-term EMA/SMA cluster and limits downside while giving the trade room to absorb normal intraday volatility.
Targets:
- Target 1 (short term - 10 trading days): $54.00 — a tactical take to capture near-term momentum and the dividend run-up ahead of ex-dividend on 03/11/2026.
- Target 2 (mid term - 45 trading days): $58.00 — primary target for this swing trade reflecting modest multiple expansion and potential regulatory or segment-level positive news.
- Target 3 (long term - 180 trading days): $62.00 — stretch target conditional on clear execution in clean-energy/ storage or multiple re-rating by analysts.
Horizon justification: the trade is set as a mid-term swing. Short-term profit taking (10 trading days) is appropriate around dividend/tactical moves. The main thesis needs up to 45 trading days to materialize (rate case news, analyst revisions, or continuing operational momentum). A longer hold (180 trading days) is only warranted if management demonstrates clear earnings lift from nonregulated assets or the multiple expands materially.
Risks and counterarguments
Primary risks
- Regulatory risk - Rate case outcomes can be delayed or unfavorably decided, compressing earnings and cash flow. A negative decision would likely hit the stock quickly.
- Leverage and liquidity - Debt-to-equity of ~1.54 and a negative free cash flow print in the latest snapshot (-$204M) highlight financing and capital allocation risk if the company ramps capital spending without commensurate rate relief.
- Momentum exhaustion - RSI near 79.6 signals overbought short-term conditions; the stock is near its 52-week high and therefore vulnerable to a pullback or consolidation that could breach the stop.
- Execution risk in nonregulated segments - Storage, transportation or clean-energy ventures could underperform or require additional capital, diluting returns and pressuring the equity.
- Insider selling and sentiment - There has been notable insider selling in the past year; while insiders sell for many reasons, persistent selling can weigh on investor sentiment.
Counterarguments to the trade
- One could argue the stock is already priced for its steady-state utility profile and that close proximity to the 52-week high leaves limited near-term upside. If capital markets remain sanguine about utility valuations, the stock may simply grind sideways and not reach the $58 mid-term target.
- Another counterpoint: negative free cash flow and higher leverage raise the specter of funding risk for growth investments. If management needs to issue equity or take on more debt at unattractive terms, that would weigh on the share price and dilute the yield story.
What would change my mind
Positive signals that would increase conviction: a clear regulatory win that raises allowed returns/rate base, accelerating EBITDA from storage/transportation, or credible announcements of funded, accretive clean-energy projects. Conversely, a sustained slide below $50.00, materially worse-than-expected regulatory outcomes, or substantially deteriorating liquidity metrics would make me exit the idea and move to neutral/avoid.
Conclusion
NJR is a trade for investors who want regulated earnings and an above-average yield, but are willing to accept a bit of execution risk from adjacent businesses for upside. The proposed mid-term long balances momentum (the stock is near-term strong) with protection (tight stop below the EMA/SMA cluster). Valuation metrics — P/E ~16x, P/B ~2.14x, and EV/EBITDA ~14x — are reasonable for a mid-cap utility with optional growth. If you agree with the idea that a modest regulatory tailwind or better-than-expected performance from storage/clean-energy can re-rate the stock, take a starter position at $52.42, protect it at $50.00, and manage to the targets laid out above.
| Metric | Value |
|---|---|
| Market Cap | $5.3B |
| P/E | ~16.2x |
| P/B | ~2.14x |
| EV/EBITDA | ~14.2x |
| Dividend yield | ~3.5% |
| EPS | $3.24 |
Trade checklist: buy near $52.42, stop $50.00, take primary profits at $58.00. Hold for up to 45 trading days for the mid-term thesis; consider short-term profit-taking around the dividend date (03/11/2026).
Note: Keep position sizing appropriate given the elevated RSI and recent insider activity. This is a mid-term tactical trade on a fundamentally steady utility, not a long-term growth equity play.