Since Black Hills Corporation (BKH) is close to my $67 target, I recommend selling the stock.
The shares have returned 12% for us, easily outpacing the gain in the Russell 3000 Value Index since my January recommendation. However, at over 17X 2022 earnings per share (EPS) estimates, and with its yield falling below 3.5%, I do not think that the name can continue to outperform with interest rates likely to rise further.
While we do hold some stocks with higher price-to-earnings (P/E) multiples, keep in mind that these stocks generate more free cash flow relative to earnings then BKH. Thus, they deserve a higher multiple.
If you are an Inner Circle subscriber who is following the Model Portfolio, sell BKH.