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Gold/Mining/Energy : Calpine Corp -- Ignore unavailable to you. Want to Upgrade?

To: PuddleGlum who wrote (6)	10/29/1997 1:15:00 AM
From: kolo55	Read Replies (1) \| Respond to of 22

Hmmm, you ask a good question. I still have some homework to do on this sector. I like the fact that Calpine is in a growth industry (cogen plants), and that they should see nice earnings growth (20-25%) over the next several years. The biggest problem with the stock is the strong seasonal impact on earnings. They should be reporting earnings for their strongest Q, the SepQ, sometime in the next two weeks. I believe the stock is trading only about 9 times next year's earnings. For the Sep Q they should report over $1.15 a share. But then the DecQ and the MarQ will be only slightly profitable, or even have losses. Therefore the stock will have to weather the slack period before we see good earnings again. But given the spate of recent plant purchases, I expect next summer we will see another good year of earnings increases. the consensus for next year is $2.20 a share. When I can buy a stock at a PE that much lower than the growth rate, it usually is a great buy. The earnings this year will up 40% over last year, and next year should grow another 22%, if the consensus is correct. I'm not sure the market realizes Calpine's earnings power yet. The next Q report may wake the market up. Paul