I didn't see the article -- I will try to locate it, Art. What was the gist of it?
Very hard to tell at this point who is going to be the beneficiary of deregulation.
I can relate something that may be of interest. A number of our elecric utlities have been coming in with new supply plans. Every one of them is in somewhat of a mild panic because what happened this summer. There was a few days where energy purchased on the open market got very expensive so they are all planning on adding either some Gas Fired CTs or CTs with HRSG (apparatus necessary for Combined Cycle operation) in the near future. My own personal view is that this last summer and even a little bit before, there has been a little bit of profitering going on and necessary supplies will be there. However, in the short term, Cos that make the CTs are getting a very good deal (more profiteering). Some of these utilities are paying hefty fees for the option to purchase with the earliest delivery around 2001.
I think some of these plans discount either a continued expansion (the worst of the plans) or a mild slowing of the rate of growth. That said, on the other side there has been somewhat of a reluctance to build new base-load plants, because of the uncertainty implicit in the coming deregulation. It will be a few more years, IMO, before we can see if there is really a shortage of supplies developing. Was the WSJ article saying there was a real shortage now?
The problem with trying to play this is most of the mfrs are very diversified cos, GE and another company (can't remember right now) have a large share of that market. Perhaps one of the parts suppliers to these Cos.
I looked at the description for POWL:
hoovers.com
I don't think that they will be a primary beneficiary of dereg as they are not directly related to the utility industry. Large manufacturing industries are probably their biggest customers and if there is a global slowdown coming - perhaps there is good reason for the stock to be down. Still, if you bought, you wouldn't be buying a high-flyer by any means. I would wait. Something that I have read and believe it is true -- the recent long-running economic expansion has been fairly narrow -- concentrated in a lot of the high tech business. Perhaps 2 - 3 years out there will be a real manufacturing led growth. This will be a good kind of co to own then. |
