Last night Crammer said that Exelon's management doesn't seem to care about maintaining their dividend or the welfare of their shareholders. I have said all along that this company lacks the principles of good stewardship to their shareholders.
There will be a cut in the dividend sometime soon, maybe as much as a 50% reduction.
Sell this wart-hog while you can still get out with your shirt still on!
I'm probably early but I have turned positive on EXC since it appears that the pressure on coal burning plants is making them crack. Midwest Generation's parent company will likely default on the loan extension in the next couple weeks and will probably default on leases and declare bankruptcy in the next couple of weeks. It is likely that 5200MW of power generation capacity will be taken off the market. Do to the cost of Clean air act improvements, it is unlikely another party will step in and pick up the leases or buy out Midwest. First Energy reduced their earnings estimates due to increases in nat gas prices. These factors indicate that the big squeeze is on. Low cost, low emissions power providers will be the survivors. Yes it is painful now, but that is when bottoms are made and shares are picked up cheaply. An improved economic climate will definitely provide the catalyst for EXC to double. However, the bottom will be put in long before the economic recovery becomes evident. I view the current SP as attractive based on the following factors:
1) Attrition of high cost, high emission coal based competitors is occurring (Midwest Generation)
2) Share price has retraced approximately 75% of the 2008 peak. SP is now currently in the channel established by the 1980-1997 trend (i.e., wiped out the entire 2008 bubble). A dip down to the low 20's may be technically possible based on the long term charts but I think unlikely since EXC is more established than earlier in it's history and the dividend yield will provide support.
3) Dividend yield is attractive. Even if it is cut, it will likely remain north of 4%.
4) Hedge wind down and increased nat gas costs will likely allow EXC to be more competitive at winning contracts from the deregulated markets.
5) Governor Quinn has been a thorn in EXC side. He currently has a 26% approval rating in Illinois. I think a field of qualified republicans will emerge in 2013 which will be able to run on a platform of fiscal responsibility which stand a strong potential of being successful. I'm not trying to start a political diatribe (I'm an independent) but Illinois fiscal situation (primarily due to unfunded pensions) was rated 2nd worst in the country by PEW. A change in administration would help make way for initiatives such as smart grid, rate increases, etc.
I have a tendency to be early but decided that it was worth the shot to establish a position before the fiscal cliff is resolved. If we go off the cliff (probably for a short while) and investors flee, I'll double down. Energy consumption continues to increase (in a long term sense), the market for clean power will firm up as soon as some of the excess capacity is removed.
I owned EXC because Crammer's recommendation before. The idea was EXC is a good candidate of high yield utility stock. The price for utility stock should be stable, but it's not happened to EXC.The result is I lost 30% of the price now. Should we listen to Crammer again about EXC? Does he really know EXC??????
I'm right there with you. I also bought because Crammer said its a good buy. I did hold off for a dip but not a big enough dip. I'm down 21%. Crammer should at least go back and see what he said prior before running his mouth.