True that utilities have been weak overall, but if you compare
simliar large utilities such as ED, D, DUK, AEP or others
with SO, SO has performed the worst. ED has been nearly
as weak but the others (and almost all other utilities) haven't
been NEARLY as weak as SO. The only worse performers
are those utilities that have had massive problems and have
or will cut the dividend such as FE and EXC. Hopefully SO
is not heading in that direction but there is obviously a lot
of concern about the cost overruns and other operational
problems SO has been encountering. Another huge concern:
recovery of these costs may not be allowed and in any case
this won't be known for years.
If investors weren't extremely concerned about
Vogtle, SO would not be within a few cents of
a MULTI year low with a 16000+ Dow. Most
utilities have been relatively weak, but none
have been near multi year lows except for
utilities with big problems that have or likely
will cut their dividend (eg: FE and EXC).
I hope SO is not heading in that direction,
but the terrible stock performance, the high
relative yield, and the persistent if not
worsening operational problems at Vogtle
and to a lesser extent at Kemper are very
concerning. Remember Exelon was a great
stock and considered a very well run utility
(like SO has been) until it wasn't.
So far SO hasnt taken a single penny in write downs or losses for Vogtle. If its recoverable and doesnt affect earning then it matters not.
I didn't buy SO at 48 I just note the stock is down
8 points in a year which is a huge hit even relative
to the overall weak utility sector. Also, while Kemper
is a big problem, the much bigger problem is
the Vogtle nuclear plant which is having truly
massive cost overruns and long delays. Worst
of all it won't be known until years from now
whether they will be able to recover these costs
from rate payers. This Vogtle plant is what
could be a catastrophe for SO and why the
stock is so near a 5 year low. Sure hope this
is not another Exelon. That used to be a great
stock too but no more. Hope that's not the future
anyone who bought any utilities at 8$ higher near their 52 week high was to bright to begin with. I love SO and think Tom Fanning is a great CEO. I am quite happy buying here and getting paid a 5% yeild to wait for Kemper to be completed. After that should be very good.
This stock is within about a quarter of a point of
not a 52 week low, but a MULTI YEAR LOW. All
the utilities have been weak for reasons outlined
in other posts, but SO is really getting murdered.
Stock hurt badly by massive cost overruns at
the Vogtle nuclear plant and to a lesser extent
by problems at the Kemper plant. Not a good
situation when you get $2 in dividends in a
year only to see this "safe" stock go down
$8. This stock has been absolutely brutal
especially for conservative investors.
Think the downturn the last several days is a sector thing , not company related. Check the holdings in the XLU and all of them are down.
I'm in at $41.15... a fairly small postion of a couple hundred shares ATM, but it is in a ROTH so no tax implications. Looking to hold for 5-10 years while collecting the div, or until we start seeing the writing on the wall for interest rate increases (which I don't believe will happen in my time horizon).
Bought earlier this week at 41.10. However, getting approximately 5% yield. Hold for awhile and price will come back up. Getting preferred treatment of dividends on federal taxes verses interest on bonds at ordinary rates. In these days a five percent yield on a fairly safe investment is a pretty good bet. Try going a day without electricity and see how that goes!.
no one throw away $411,000 around for no reason, better yet rich people who think twice before spending a $.
SO will go up strongly into 2014 and beyond
SO is trading at a big discount to other utilities cause of all the worries about Kemper cost overruns. If you compare charts of SO with other utilities like ED, AEP and PPL they all bottomed in September and starting moving back up except SO which has gone nowhere. Utilities have 2 headwinds right now. 1 no one wants to hold slow moving safety stocks in a raging bull market and 2. rising interest rates put pressure on Utility stock prices. I think all of these factors are creating a great buying oppertunity for SO. I currently have bought 75% of my position and Im saving the last buy incase we have a good correction in the market that puts more downside pressure on its price. If i can build a position at 5% yeild, I am more then happy holding this long term as I believe interest rates should stay low like 3.5% on 10 year or lower for several more years.
I have no idea why utilities continue to get hammered each and every day as the overall markets continue to hit all time highs. This has been going on for a couple of months straight now.
Look at ED and all the others. Certainly SO is right there in getting plastered.
Looks like a new director who probably has a mandate to own 10,000 shares or something.
While $411k is a lot to you & me. Its not much to the SO directors who are all multi-millionaires and get hundreds of thousands per year for their board service.
Im long SO....just saying.
1-Nov-13 10,000 SO Purchase at $41.13 per share.
(Cost of $411,300)
10-Dec-12 500 SO Statement of Ownership
After reading your post, i did some more work on thier debt. at the beginning of 2013 they had 19.2 B in debt and paid 210 mil in Q1 in interest which gave them an average of 4.37% interest. As of Q3, they had 21 B in debt but paid 202 mil in interest giving them an average interest of 3.84%. You are correct that they are able to take on more debt for cheaper, but there comes a limit to what they can have before it risks a credit rating downgrade. I am still liking the valuation at only 14x next years EPS. They have great cash flow to keep the dividend going even through the overruns of Kemper. On any sell offs, I'm a buyer so i can get a good DCA for a long term position.
To put it simply, Al Gore is just a jerk. Thank God the good people of
Tennessee (his home state) saw through this hollow, petty and
cheap opportunist and saved us from a Gore presidency.
Given his behavior since 9/11 ( the vitriol he expressed toward
the man who beat him in 2000 at a time we were all pulling
together in the face of the 9/11 attacks, the sale of his worthless
tv channel to the viciously anti American Al-Jazeera to make a
humongous profit, and his exploitation of climate change hokum
to profiteer while hard working Americans face higher energy
bills as a result) I don't think our nation would have survived
a Gore administration. His appeasement of the Islamic extremists
would have been a disaster for the US and the world.
I am like you in the sense that I don't like debt either and the more debt the worse it is as far as I am concerned. But ratios like the ones you cite are good for evaluating debt. What you didn't mention which is probably the case is that the new debt that SO is taking on is going to be somewhat cheaper than the old debt because of lower interest rates and better terms. I also own EXC and they are paying down their massive debt with better debt at lower rates and with cash payoffs. The thing I like about SO is that they are growing its businesses in a growth region of the country. They have good businesses with high barrier to entry. You're right about the stock being reasonably priced now.