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Gold/Mining/Energy : Mirant Corporation (MIR)
MIR 24.80+4.1%3:07 PM EST
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To: KyrosL who wrote (278)2/25/2002 10:55:29 AM
From: Oeconomicus  Read Replies (1) of 903
 
Looking just at the yield, that makes sense. I just have a hard time buying that it will maintain a 100% conversion premium if the common manages to double.

BWDIK?

BTW, I think a restoration of MIR's investment grade debt rating from Moody's could rather easily double the stock. And that would still put it at a sub-10 PE. Give it a long-term market multiple - let's say 15x - and we're over $24.

What would it take to get there? Besides the Moody's rating, the things that would be a big help would be 1) a return to normal energy market conditions and 2) settlement of the California issues.

On the latter, if MIR's only CA LT contract is for 500MW, I can't imagine a significant impact if it is voided. Considering the extraordinary efforts of the CA government to get into these contracts to begin with, I'd think the worst case is that they go back to market rates, and considering that 500MW is only about 3.6% of MIR's US generating capacity (less significant when you consider global electric capacity and gas sales), the bottom line effect should be insignificant.

The important thing about CA is that ongoing news keeps the industry in the dog house. Once it's resolved, the pressure on the industry should subside.

But again, WDIK?

Regards,
Bob
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