Although EXC has made a number of regulated utility purchases to reduce it's exposure to the wholesale electricity market it's fate still relies on the price of kilowatts moving higher which is directly dependent on the price of natgas and the retirement of coal burning power plants. The latter is a certainty as man-made global warming and it's consequences tightens it' grip on the world economy. The GOP can only protect the coal industry for so long. The price of natgas is a bit more tricky as production spikes due to fracking. The recent weakness of EXC is due to natgas falling below $3.80 MMBtu.
There are a number of reasons ngas will not remain at these low levels for long. Number one on the list is soon the United States will be exporting large amounts of liquified ngas overseas which will drastically change the supply/demand equation pushing prices much higher. Europe currently pays $10 bucks MMBtu and Asia will be willing to pay nearly the same price in the future as their cities are choked by the many poisons of burning coal.
Another wildcard that works in EXC's favor is eventually some form of a carbon tax will become a reality making EXC's carbon free, nuclear energy highly profitable. I foresee a tax on all global warming gasses, including methane, which will serve to push ngas prices even higher.
People can argue all they want about man-made global warming but the bottom line is this...The more global warming gasses humans pump into the atmosphere the warmer the planet becomes. End of story. Drastic measures will have to be taken to offset the severe consequences. This is where Nuclear becomes the base load provider, supplemented by wind and solar. I would not be surprised if EXC pulls in well over $5 EPS in the not too distant future. This sell-off is a buying opportunity. Time is on our side and you get paid a 3.9% dividend while you wait. The 30 year treasury currently yields 3.35%.
Republicans can deny the science of man-made global warming all they want to appease their base but it does not change the reality of a rapidly warming planet caused by the unprecedented release of global warming gasses (burning of fossil fuels). I suspect 15 years from now Nuclear will be the baseload provider of electricity in our country supplemented by wind and solar. Electric vehicles will dominate the road in 25 years. In this environment EXC thrives.
To move the public away from fossil fuels and to better represent the true costs of burning coal, oil, ngas, to our environment (drought, floods, wildfires, bug infestation, disease, rising sea levels, acidic oceans, water shortages, higher food prices et cetera) some form of carbon/methane tax will be imposed and it will be significant. The margins on nuclear generated electricity will soar making EXC a very valuable stock.
What is quite ironic up until this point it has been the oil and gas companies that have been heavily subsidized and nuclear penalized, even wind and solar has received significant subsidies (although some of those subsidies are now coming to an end). This present subsidy paradox should do a 180 in the near future as the dire reality of global warming ramps. We have already breached the critical 400 ppm carbon threshold. When things turn it will happen very quickly as the globe goes into panic emergency mode, with nuclear the only viable option.
It is quite costly and time consuming to build new nuclear plants hence the reason one has not been constructed in the U.S. for quite some time. This gives EXC an even larger advantage over other utilities with it's existing nuclear fleet which can be modified to produce even more energy at a relatively cheap price.
If this scenario plays out, which I believe to be quite plausible, EXC earns well over $6 bucks a share in the not too distant future. We shall see...
First Energy has large exposure to coal burning power plants so I would not purchase the stock, although the bonds are quite interesting.
Getting absolutely pummeled! Could this be the classic pump and dump?
Jobs report and bond market pointing towards stronger growth yet as I type EXC a merchant power supplier is down well over 3% today. One should not lump EXC in with the majority other utilities which are strongly sensitive to rising rates. Growth will translate into significantly higher power rates for EXC fleet of nuclear power plants, and add to that fact the inevitable carbon tax (whatever forms it takes) will serve to only increase profit margins for EXC's carbon free energy. Looking into the future nuclear will serve as the base load energy provider with wind and solar supplementing, replacing coal and nat gas. Nat Gas is way overhyped and in many respects a stronger contributor to global warming than coal (Methane trumps carbon). So I am using today's sell-off to add to my EXC position as it wrongly plunges with the utility index.
PFE's R&D has been the laughingstock of the industry for decades. Zero Accountability. Hence the reason PFE is forced to pay outrageous prices for other pharma's pipelines.
Sadly, Granny would be a significant improvement from the present inept PFE R&D.
Endless toxic particulates, mercury, deadly coal ash deposits that poison our water, large contributor to man-made global warming. Not even the despicable republican party can stop the end of dirty coal. Green energy is our future.
What is Pfizer...Correct!
Maybe if PFE's Mgt got it's own R&D in order it wouldn't have to pay $120 billion for another Pharma's pipeline.
I guess when mgt threatens and implements job cuts every year because of bonehead acquisitions, morale and motivation to produce ceases to exist.
You were warned! Wall Street mafia pulled some serious manipulation yesterday. Truly a sucker's rally.
30 year yields are saying YES.