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Southern Company Message Board

  • beefstu57 beefstu57 Dec 23, 2013 10:29 AM Flag

    What on God's green earth is wrong with utilities?

    Every single day they seem to tank regardless of record highs in the Dow and other markets.

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    • SO has a Beta of .28. If the Beta was 1, it would be in step with the S& P 500 index, if it was a Beta of 2 it would jump twice as high. If it was -1 , it would go down as much as the S & P goes up ( Detroit Edison did this. A Beta of .28 indicates that there is a disconnect between the S & P 500 index and SO share price.

    • When you digress to that question....you SELL! They "WILL" go lower.....bless you

    • Environmental and government regulations have hurt utilities earnings. Being forced to produce a certain % of power in expensive wind mills and solar power cells that will never pay for themselves instead of cheap coal and natural gas plants has driven PE ratios and thus stock prices down. Nothing is free and in this case the stock holder pays the price for a socialist government at work. The typical PE ratio of a utility stock that most investors are willing to pay for is about 13 when interest rates follow inflation rather than being kept low by government control. So if the FED lets interest rates go back to their norm, what does that tell you about most utility stocks prices currently and where they are still headed. They are not cheap now compared to 2009.

      • 1 Reply to icylander1
      • Agree. Shareholders and consumers (especially the poor) are
        hurt by the true environmental extremism of this administation.
        The damage caused by the under the radar environmental
        zealots in the Obama White House and EPA is an under
        reported story. This administation treats people in the energy
        business (especially those involved with coal) like terrorists
        to be eliminated not by guns but by regulation. Unfortunately
        they are succeeding and we will all pay the price.

    • Utilities have a lot of debt. If interest rates rise then it costs more to service the debt which decreases earning. Its not that hard to figure out.

    • Its cause people are throwing caution to the wind to chase the hot stocks. I think this makes for a great buying opportunity. The market wont go up forever and there is bound to be a correction that will reverse this trend.

 
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