Dynegy, Inc. (DYN)

NicieNicie (47.00) Submitted: 8/27/07 11:55 PM : Start Price: $8.00 DYN Score: 17.98

It's hard for me to praise this one. DYN has a volatile Beta of 1.78 and an absolutely Alpine P/E of more than 58. It has made lots of money for lots of people in the recent past, and that may continue.


On the other hand, DYN is in the utility game right at its most vulnerable linchpin: generation, for wholesale distribution. DYN's owned dynamos, liberally strewn thru much of the middle part of America, are highly tilted toward hydrocarbon (esp. coal) The trend is obviously away from bituminous-quality coal and toward clean-burning natural gas, nuclear, even wind. How long this takes, and who profits by it when, is probably more a by-product of politics and finance than of technology per se.


Dynegy Inc.'s Corporate Governance Quotient (CGQ®) as of 1-Aug-07 is better than 29.8% of S&P 500 companies and 36.8% of Utilities companies. Pretty subpar.


Options? -- Chesapeake Energy (CHK), mostly nat'l gas, (always referred to in company lit. as "clean-burning natural gas") is a steadier performer--you wouldn't have made as much money in the past couple of years but it is not as "malarial" (fever followed by chills) as burning coal or oil or distributing only at wholesale. CHK's Beta is a placid 1.02.


Or you could look at some partially regulated electric and gas utilities (CEG, PPL) that have done stupendously well for their stockholders over the years. Or if you want to take a gamble, some medium-large size intergrated oil (VLO, COP) has done reasonably well. And over the very long term, five-plus years, if you had held your nose and bought Schlumberger (SLB), you'd have made the most money of all.


High return--higher risk. I'm not crazy about under-$10 stocks, but even at that, you can find better.

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