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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (18629)	1/4/2002 7:33:28 PM
From: DlphcOracl	Read Replies (5) \| Respond to of 99280

Zeev and thread: What are your thoughts on the Utilities sector for 2002 as a contrarian play? Aside from CPN, the entire utilities sector (by this, I refer to electricity generators, power producers and natural gas companies, NOT oil-drilling and oil services stocks), looks interesting and undervalued. They are very out of favor and may (IMHO) be a profitable contrarian play in 2002 for a 6-12 month hold. I make the following observations. 1. Looking at a 10 year chart of the DJ Utilities Index, it shows a remarkable uptrend, which has only recently been interrupted over the past year. 2. I believe that "the baby has been thrown out with the bath water" and that the recent DJU low of 270 in mid-December is in large part related to the Enron debacle. The other power producers such as DUK, AES, TXU, D, SO, EXC, etc., are solid companies with reasonable valuations and no questionable entries on their balance sheets or books. 3. Last summer's energy crisis didn't disappear. We still have a scarcity of electricity-generating capacity. If economy recovers in second half of year, much of this will be in the tech sector, greatly increasing power needs. Another hot summer will do likewise. 4. From a fundamental perspective, the DJU appears to have bounced off of the 270 (mid-December) level, a level of LT support. Note that a trend line can be drawn in the 270-275 region from previous lows here in Sept. 1998, Dec. 1999, and March-April 2000. I think that a sector fund which tracks the DJU may show 20-33% upside over a 12 month period and may make a good LT hold. I would appreciate comments, both positive and negative, regarding this play. DlphcOracl