Duke stock is hot......
which is why I bailed out (@ 60)
Per the 3/26/98 issue of the Charlotte Observer...
Since 8/97, DUK has trailed the Utilities Index and
also CP&L and SCANA. It has also trailed the SP500 for a
number of years.
It's a good stock but not the "outstanding and nothing
is going wrong" scenario management is laying out.
As a long time contractor at one of their power plants,
I can say with confidence be WARY!
I still own the stock but have cut back. The risks are
I prefer to hold prime takeover candidates with low costs
and no or very limited nuclear liability.
The Breakfast Report is a publiction for
employees that gets its name from the meetings that take
place in Houston or Charlotte.
A member or members
of upper management met with a number of employees
at certain times and discuss issues that pertain to
the company's operations and the surrounding business
Also they take questions from the audience or they can
take them via E-Mail. It is then published and sent to
troops in the field. Sometimes it is quite interesting.
Duke's nukes are continuously running over budget on maintenance, operations and engineering. Brain drain (from layoffs and
fed up employees) has contributed to excessive labor OT, higher than anticipated #s of contractors, lax cost controls (supplies,
adherence to working hours etc.). Upcoming issues...relicensing for Oconee Station (mega $$$ for upgrades), spent fuel storage, high
overhead for employees (pay and benefits) etc. If nuke is so cheap why are the owner partners trying to bail out of the Catawba
Do not listen to management or analysts...get to know and talk to the employees and customers. For example, Duke was recently rated #1 for customer satisfaction, however, what they didn't tell you was that their rating fell 8% point from previous year. Rated #1 is meaningless, the drop is a forboding sign.
Even after filtering out the emotional discontent from they can supply detailed information on some looming issues that need to be addressed.
Duke's mentality has always been somewhat arrogant. "We are the best and the rest of the world can learn from us." This still holds true to a large extent.
Point: Duke's expertise is in generation....all of its subsidiaries contribute but a portion of the profits.
I own (bought when dirt cheap) but not buying (or selling). I cannot justify buying stock that has historically lag the overall market and will probably continue to on a long term basis. It is not a safe, defensive stock anymore! Full de-regulation will be a bloodbath.
In summation look for low or no nuclear exposure and utilities who have cheap rates in fast growing areas of the country. High costs and that looming threat of a mishap poses risks. Buy on drastic dips, have a loooong term horizon and if you want utilities diversify into 2 or 3, maybe even an aggressive marketer with no generation assets. Do not get me wrong, Duke is a good stock but look beyond the propanganda.