Electric utilties.
I forsee valuations rising as industry consolidation accelerates. Already we've seen major mergers creating firms like New Century Energies (NCE), CINergy (CIN), FirstEnergy (FE), and Ameren (AEE). Short-term, there could be negative pricing pressures as monopolies are broken down, but I see some parallels to the strong performance of the Baby Bells in the face of ongoing deregulation. It's also my impression that power generating capacity cannot sprout up virtually overnight, thus adding value to existing power assets as consolidation increases.
In regards to choosing utility investments, I look for companies with large market capitalization, smart management, attractive geographic positioning, decent dividends, etc.
Philip
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