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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: jim_p who wrote (11040)	12/12/2001 1:39:20 PM
From: upanddown	Read Replies (1) \| Respond to of 23153

Good idea, Jim. The yields look awfully good compared to MM yields and many are selling close to 52-week lows. Most of their earnings forecasts for next year exceed the outlook for the general market. Another one I like that would fit your criteria would be TECO Energy (TE) yield 5.40 D/E 1.62 Coverage 61%. John

To: jim_p who wrote (11040)	12/12/2001 1:42:51 PM
From: kodiak_bull	Read Replies (2) \| Respond to of 23153

Jim, I guess anytime you buy a stock for a dividend play you are concerned about the health of the dividend and the stability of the stock price. When I look at charts on these utility stocks, they look pretty sad. Is it all harmless fallout from ENE DYN CPN EPG, or is it something more? Is it possible that the level of scrutiny these guys are going to have to go through will reveal similar fun 'n games in the utility industry as a whole? How about the basic health of their business? With energy prices falling, assuming these guys are still by and large regulated as to rates where they operate, you have to assume some of their rates are going to fall. Add to that decreased industrial and consumer demand, and earnings are likely to fall. How low? Will that impact the dividends? I guess my first cut at trying to understand an area I haven't dealt with before seems to throw off a lot of smoke and dust. Is there better visibility for these stocks than first appears? Kb

To: jim_p who wrote (11040)	12/12/2001 1:48:21 PM
From: energyplay	Respond to of 23153

Jim_P --- Utilities may be a good idea. Fears with utilities is you get 1) a PG&E or another California situation. Or 2) that politicians cut rates to win votes. WIth a trend toward lower energy prices, those fears may be overstated. The third (3) fear is that your utility management will try to re-make the company into a "Dynamic energy & resource company" or a "Dynamic trading and financial services group" Post enron , MOST of those fears have faded - but the utilities business is still 'dull' and managements are still ambitious for some corporate adventure....at the expense of the stockholders, if not the rate payers & bondholders. The last (4) fear is that the slowing economy cause more conservation, cutting revenue. WIth lower energy prices, that is only likely to apply to heavy industrial areas, like Aluminum. WIth high payout companies, this can be a real risk. Might be a good idea to see if utilitiese get hammered a little more, and then consider buying a well run utility fund, where someone else gets to wade through their balance sheet, debt structure and long term contracts to asses the risk/rewards. That could be worth the mutual fund management fee. As an alternate I think there is at least one utility closed end fund, which may be selling at discount to NAV. This tend to enhance your yield. I'll try to find and post info later.

To: jim_p who wrote (11040)	12/12/2001 3:09:16 PM
From: ItsAllCyclical	Read Replies (1) \| Respond to of 23153

Jim, I like the idea of dividend stocks in this environment. I also agree that the utilities have been hammered. But I'm not sure they've found bottom yet. Found this on yahoo. Applies to REI, but I think it applies to most of the sector as well. I'm concerned about rates coming down further and more capacity coming on line. What's your take on this? ------------------------------------------- This stock, and its spin-off RRI, are the result of a failed strategy. REI is approaching its 52-week low, while RRI is down over 50% from its IPO price just several months ago. What's wrong you asked? In a word, the generation, trading, and international strategies. Merchant power generation was supposed to be a huge engine of growth. Now with prices having plunged, ever increasing capacity coming on line, and a fiercely competitive environment, this business looks terrible. Add to that the growing regulatory backlash, likely voiding of favorable long-term contracts, and general economic weakness, and you have a recipe for disaster. Trading was also supposed to be a great business. Unfortunately that just isn't the case, and never has been. Trading is not a consistent profit generator and doesn't have identifiable long term growth. There is no value here. Look at Enron's business for a comparison. International? REI top-ticked the market with its purchase of UNA, and now it wants (needs) to dump it at prices likely well below what it paid. In Europe, REI has all the same problems it has here, but with even more unfavorable competitive and regulatory environment.

To: jim_p who wrote (11040)	12/13/2001 2:58:00 AM
From: energyplay	Read Replies (1) \| Respond to of 23153

Re: Utility stocks - looking at the short interest - I bet the NRC studies of the cracks were known to many people, and the hedge funds found out & shorted - between the Enron uncertainty & the NRC nukes shutdowns, stocks would be soft. Key figure on short number is the short ratio, or days to cover (shares short / average daily volume). Anything much over 3 is high for a non tech stocks. Calpine and to some extent Duke (DUK) terade some much they have low short ratio. Nuke utilities, such as PGN, Florida Progress, have higher short ratios than non-nuke, like TE TECO -Tampa Electric, in the same state. - CO. Yield Payout % Leverage % float short short ratio SO 6.0% 84% 1.3X 1.8 6.28 DTE 5.1% 59% 1.91X 1.3 4.6 AEP 5.8% 68% 1.8X 1.0 2.78 REI 6.1% 47% 1.34X 0.8 2.32 PGN 5.1% 63% 1.61X 1.7 8.18 ED 5.8% 68% 1.1X 1.5 4.43 TE 5.46% 2.5 4.43 traders CPN 8.2 4.33 DUK 1.2 3.26 Shorting stocks yielding 5% takes a LOT of guts ! I would not be surprised if there are too many shorts out on some of these stocks, and we see a short squeeze as the hedges all go for the door. Then again, there's lots of stock out there to borrow, just sitting in brokerge accounts. The extensive short interst may tend to support the stocks for a number of weeks is there is another drop - at least until the ex-dividend date ;-) Alternative theory - the Utilities are down because the world IS coming to an end. I don't think this is true, but maybe if you are a nuke utility facing a BIG repair bill at a time when your customers are conserving, and you still need to service debt, maybe your dividned is in danger...Southern Company, SO, could be in this situation. I can see where this will drag down utilies as a group, since the average utility owner (maybe the surviving spouse of the person who bought the stocks) doesn't have much of a clue and get their news from television, and not the Wall Street Journal. Many cannot understand income statements or balance sheets. The insitituional utility owners owners are looking for yield, low volitility, and no problems. Since some of them have no tax issues, they can move to REITs, corporate bonds, commercial paper, etc. The present environment of uncertainty does not serve etiher class of shareholders. If uncertainty continues, Utilities could keep dropping until the yield gets even higher...

To: jim_p who wrote (11040)	12/13/2001 11:49:43 AM
From: kollmhn	Read Replies (1) \| Respond to of 23153

Jim- Utilities may have been hammered but, would you buy them irrespective of their yield differentials? That is key, IMO, because without an underlying belief that their prices are going to increase, the risk reward just isn't there. The 3% difference in yield amounts to barely a point move in the stock price. So, if I'm not willing bet on the stock price holding firm, I'd take a 2% MM yield with a guarantee as to the stock price, instead. Now, if I really was after the yield, I'd buy some quality junk bonds.