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Strategies & Market Trends : Value Investing

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From: Shane M	2/12/2014 8:49:35 PM
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EXC - Exelon Corp - Power Utility and marketable Power generation finance.yahoo.com All, I'm just posting here to see if anybody is long EXC or has a favorable view? I just built a new model to flag for companies in cyclical trough scraping bottom and this is the first one I'm checking out. It's one of those down in the dumps type companies with not much good to be said about it. Low Natural Gas Prices are hurting their power pricing. They have alot of nuclear generation and low prices are apparently making some of their reactors unprofitable. About only positive I can see right now in my limited review, is they could benefit in a move away from coal plants due to their cleaner generation. Demand growth is not going to help much to grow them out of situation I don't think, at least based on the low % demand growth rates they quoted in their forecasts. Reading the conf. call. it sounds somewhat like a frustrated management stating they are victim of market distortions and should be compensated for the stability of their generation capacity and are lobbying for that. I'm unsure of the merits of this arguments pro or con. If I understand, the argument is that natural gas is driving down prices, but that natural gas is a more variable/seasonal (less consistently reliable?) energy source than nuclear which you fill with fuel and let it run for 18months steady. In recent call mgmt guided earnings lower again for 2014. It's trading low right now - slightly more than book. A major concern I have though, does this even mean anything if they have to shut down some of their assets due to ongoing unprofitable operation? I'm also not convinced dividend is sustainable despite lowering it recently. Any reason to buy this one other than it looks cheap? If they can get back to any semblance of the business they had previously this should work out well, but - has the landscape permanently changed? Anyhow, thoughts appreciated if anybody is familiar and feels like it's worth a go.

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