The AES Corp (NYSE:AES)

I geuss I fail to see the reason to own a utility that doesn't pay a dividend when there are so many that give a real nice payout without large debt loads. In other words when does it really start paying investors?

Pending merger

Purchase of DPL expected to be immendiately accretive to forward earnings.

Many countries are looking to expand power coverage and generation. Opportunity to expand or establish business in India.

REdneckstocks

Utility company has been knocked down recently, And is unwarranted, Value Buy

Alright, couple of reasons I'm marking this as outperform, none of them related to the specific company at hand. Typically, about twice a year, I'll go to the finviz heatmap:

http://finviz.com/map.ashx?t=sec&st=ytd

From there I'll check the trending 6 months, 1 year, and YTD to find lagging sectors.

Once I find the lagging sectors, I'll do a quick analysis of the macro variables at hand and determine whether the secto is warranted to be under performing the market or whether I think the market has undervalued these sectors. In this case, I think O&G exploration and development as well as utilities are undervalued.

If you notice, pharmas are also undervalued, but I think the new healthcare law makes their underperformance relevant at this time - if they continue to be undervalued at the time of my next review, I may pick up some in the sector.

I digress, the reason I think O&G and utilities are a good buy at this time:

1. Winter is fast approaching
2. Energy prices are still comparatively low and will go up
3. The economy is rebounding
4. The oil spill worries are becoming something of the past for the majority of Americans (Personally, I hate that recency plays a factor in this at all)
5. Likely republican majority in one chamber will make it difficult to pass major energy reform, thus old energy wins and new energy loses. (Much to our malevolence)

After I determine which sectors to buy, I'll review each individual stock in CAPS. Anything less than 3 stars gets filtered out. 4 and 5 star picks are most preferable, as these quintiles usually gains points in a year's time.

I expect to remove 90% of these stocks by March/April. Typically, this nets me a few hundred caps points (read: profit), and roughly 75% accuracy. Some will be bombs or laggards. Those that barely lag will be kept on my portfolio in hopes that I may eke out a slight gain at a later date. The bombs will be dropped.

I want to emphasize, this is not a judgment call on this specific stock. I didn't even check the financials. Do your DD if you buy in RL. In fact if you like the sector and want to buy in RL, I recommend you buy a sector ETF - one of my personal faves is FCG.

Utilities will keep their value over anything else at this time

Great geographic diversity, has contracts in every populated region of the world. Major growth in China as AES locked up energy contracts before competitors and has strong relationship with Chinese Administration. Increasing population and increasing quality of life in emerging markets means more demand for electricity AES provides.

I closed out my previous losing outperform call and am doubling down at the new price.

This stock has done nothing since 1991! It carries a massive debt load and likes to spend. I inherited it when it took over IPALCO a great utility with a high dividend. Today it has no dividend and no prospects. If I sold today (at a five year high) I would lose 75% of my investment. At less than $500 it isn't worth the effort!

As companies look to raise manufacturing levels and grow as the market turns upward they will use more power and need a steady source. AES will provide that power in multiple places around the world.

AES is a global power company that does business in 29 different countries. By the company's own measure, they produced $1.6 billion in consolidated free cash flow in 2009. Consolidated cash flow includes cash created, but held by subsidiaries or through companies that are not wholly owned. Excluding cash flow held in subsidiaries, AES had cash flow of $899 million. $1.25 billion was distributed to the parent company in 2009.

In addition, the company has several projects nearing completion. 1,400 megawatts of power projects are set to come online in 2010 and another 800 MW for 2011. The company has total power generating capacity of 40.5 million megawatts.

In 2010, the company expects $2.0-2.2 billion in consolidated cash flow, $900-$1,100 million in proportional cash flow, and $1.1-$1.2 billion in distributions to the parent company.

AES does not pay dividends, but reinvests their cash flow in new projects. This can hide cash flow, but is key for the growth of the company. The company does a good job of breaking out what are maintenance capital expenditures and what is new investment. Investors need only look past net income.

AES as of today, has a market capitalization of $8 billion. They are priced at 4x their estimate for consolidated free cash flow, 8x their proportional cash flow, and 7.3x cash received by the parent company. To put this in perspective of other utility stocks, if they paid 50% of their received cash flow as dividends, they would have a yield of 6.9%.

2000 plus increase in output power out of 40000 coming soon. This is over four percent and that means huge revenue. Plus China's stake not likely to be moving around.... buy....buy...buy... Today this is my largest holding!!!

Global energy play on electricity, with an impressive pipeline - electricity consumptions are going to rise significantly in emerging markets and AES has been selected as the best utility play by Goldman Sachs in their Nifty 50 DM index.

renewable energy is the "thought of the day both politically and economically" on the agenda worldwide. This company is internationally known. China bought this at $12 plus. It is expanding worldwide and is one of the best company to work for. I found this company reading Fortune.

global power play (literally), low P/E ratio, nowhere to go but up...

long term energy play.. does alot of stuff overseas

Set for global expansion