Christopher WilliamsDominion Resources IncDTOP PICKMar 26, 2004
Some of the diversified utilities are well-positioned. Their rate structure is based on a cost plus so oil prices do not affect them. As the economy grows, more power will be required.
(A Top Pick Feb 21/07. Up 2% including dividends.)Thought there would be more of a catalyst by selling their oil/gas properties, which they did, but management paid themselves $16 million in bonuses. Now might be an interesting time to look at this.
A US utility which also has E & P properties that they are looking to sell and expecting $16 billion for it. Intend to buy back stock and pay down debt. Negotiating an advanced agreement with Virginia regulators to get additional upside in cap return.
4% dividend. Likes its diversity of utility, pipeline and liquefied natural gas terminals. Also has 6.2 TCF of gas and oil equivalent. Cheaper than some of its peers.
Q:"What companies could profit from liquid natural gas?" A:"You want to focus on some of the utility names. It's only 3% of the market and there are large groups opposing shipments."
As a utility, it has reasonable downside protection. Has a gas arm with substantial gas fields, which gives it a diversified earnings base. Also has one of four LNG terminals in the US, which gives it somewhat of a monopoly.