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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (84009)	12/28/2003 11:10:05 PM
From: Tom Pulley	Respond to of 99985

Hawk, I like the energy sector in general. Natural gas prices stayed strong this summer even though inventory (storage) was fairly high. So, maybe the market is telling us there will be more demand than supply over the next few years. Oil prices could be supported by demand from the recovering economy and a lower dollar. So, the outlook appears good to me for oil and gas producers over the long term. As far as CPN, I don't follow them specifically. Here's some thoughts, but don't put much weight on them since I don't follow the company. I know they are a power producer and therefore a consumer of natural gas; as well as being a producer of natural gas through an E&P group. So, higher natural gas prices might not impact them significantly since they both produce and consume. Their debt to equity ratio is quite high. Do you know if they followed Enron's lead in the late 1990's like Elpaso, Reliant, etc and made some questionable investments using mark-to-market accounting? I don't think it is a given yet that all these companies will work their way out of these poor investments. CPN made a nice bounce with the market through June, but has not kept up since then. It could be a very risky stock if it hasn't lowered debt before the next downturn in the market and economy. But it might perform well for you while the market is strong and economy is strong. I follow ElPaso who is a similar company with a similar high debt load. The difference though is that ElPaso's Production division has performed poorly over the last year and has not been able to take advantage of the higher natural gas prices. As far as I know, CPN has a fairly solid Production business which should be making lots of money with the current high prices.