Tag - EXC

"No US utility owns more of them than Exelon (NYSE: EXC), with 17 reactors," says Roger Conrad, who chose the stock as his latest "growth spotlight" in The Utility Forecaster.

"Some 80% of company earnings come from its unregulated generation fleet, 90% of which is nuclear. And it’s by far the best-positioned US utility to ramp up nuclear output.

"Existing brownfield sites are the only places to build the new reactors Washington wants. Exelon has also been masterful boosting efficiency, running its nukes at 92% of capacity or better for a decade.

"And it will increase their capacity 20%, or 1,300 to 1,500 megawatts, by 2017, by upgrading plant turbines.

"Exelon shares took a hit last year and now sell for barely half their July 2008 high. A 29 percent boost in first quarter earnings per share and affirmation of full year guidance laid recession questions to rest.

"The stock price and the company’s credit rating, however, have remained under pressure, due to a takeover bid for power producer NRG Energy. NRG management has gone to court to block the offer of 0.485 Exelon shares, though it’s hinted it would accept a higher number.

"The current deal has apparently won over a majority of NRG shareholders. The bottom line, however, is that Exelon will prosper as a nuclear power with or without NRG. And yielding over 4% and at barely 10 times projected 2010 profits, Exelon is a buy up to 60."

Small-cap stocks started out the week with an impressive rally, riding the crest of climbing energy stocks, signs that the credit crisis is on the improve and talk from Federal Reserve Chairman Ben Bernanke that additional fiscal stimulus could be needed. The Russell 2000 (NYSE:IWM) closed up 20.40, or 3.88% at 546.83. The Russell is now down 29% for the year, while the Dow is off 30% and the S&P 500 is down 33%. Small caps lagged large caps today even on the rally, which is a little bit of concern as the same pattern was evident on the recent collapse.

Crude oil futures climbed 3.3% today as energy traders anticipate OPEC will cut production to counter soft demand and sinking prices. However, while the energy story was the dominant theme today, the move was powered by more than gains in the physical market. Oppenheimer analysts announced upgrades for several stocks in the sector and merger news also played a supportive role, which powered buying in beaten down energy stocks across the market capitalization spectrum. As for the M&A news, NRG Energy Inc. (NYSE:NRG) received an unsolicited bid of $6 billion from Exelon Corp. (NYSE:EXC) and the firm would not rule taking this hostile status if need be. The general rule of thumb is that if there are deals to be made in the large-cap world, then there are probably even more attractive deals to be found in the small-cap spectrum.

Interestingly, the rally today in crude oil and energy stocks was not a general push for commodities. In fact, the U.S. dollar gained about 0.6% versus the euro, which makes dollar-denominated commodities more expensive, and despite the rally in crude oil, the Commodity Research Bureau Index of 19 physical markets was basically flat.

The stock market was already on solid footing overnight on news of another steep decline in the inter-bank (or Libor) lending rate, which suggests that frozen credit lines are starting to thaw and that banks are beginning to trust each other . . .

Small-cap stocks remained higher into midday trading, propelled on the opening by climbing energy shares and optimism over another big pullback on inter-bank lending rates. At 12:31 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.10, or 1.16%, at 532.53.

An upside surprise on leading indicators data was another supportive element in the mix this morning, but appeared to garner very little market attention. The leading indicators report came in at plus 0.3%, well above the forecast for a dip of 0.2%.

Meanwhile, a morning speech by Federal Reserve Chairman Ben Bernanke came and went without too much fanfare, although the market may have found some solace Bernanke’s assertion that frozen credit markets were starting to thaw and that inflation worries have receded.

The big story so far today has been the energy arena following analyst upgrades on several key stocks and some potential merger and acquisition activity. Researchers at Oppenheimer & Co. raised their forecasts on a raft of oil companies, and the Energy Select Sector SPDR Fund was up about 5.5% into mid-session. Within the small-cap sphere, PrimeEnergy Corp. (Nasdaq:PNRG) was up about 16% while large-capper NRG Energy Inc. (NYSE:NRG) gapped higher and jumped some 21% after receiving a takeover off from Exelon Corp. (NYSE:EXC).

Other small caps of note include Allscripts-Misys Healthcare Solutions Inc. (Nasdaq:MDRX), which was up about 17%, trying to recapture huge losses suffered the last couple of weeks. Along the health line of thinking, WebMD Health Corp. (Nasdaq:WBMD) was up 22% on news that a merger has been terminated.

Technology shares have been lagging the overall market this morning, and have been a mild drag on small caps amid concerns that spending on technology initiatives is not out of the woods because of the slumping economy around the world. The tech-laden Nasdaq 100 Index was up just 0.8% at midday and key large-cap tech . . .

Small-cap stocks opened with a strong bid this morning, boosted by encouraging signs in the bank lending market, a rise in energy stocks on analyst upgrades and a perception that a speech from Federal Reserve Chairman Ben Bernanke was slightly more upbeat than recent appearance. At 10:08 a.m. ET, the Russell 2000 (NYSE:IWM) was up 10.33, or 1.96%, at 536.76.

The initial rush of Bernanke headlines (his speech is released with a time embargo to selected media outlets before he starts talking) included a line that there were some encouraging signs in credit markets and another point that falling commodity prices will bring inflation down (which makes it more likely to see more rate cuts by the Fed).

The leading indicators report came in at 0.3%, which was quite a bit better than the forecast for a dip of 0.2%. This marked the first monthly rise on indicators since April and was clearly good news, but the report often flies under the radar and was particularly overshadowed by the Bernanke watch.

Crude oil futures were up about $1.50 a barrel, providing a lift to energy-sensitive stocks and also to commodities in general. Grains futures were called solidly higher this morning and a bounce in physical markets could provide some relief to downtrodden commodity-themed stocks.

Lost in the shuffle of the inter-bank lending dip and the Bernanke headlines today is the fact that we are deep into peak earnings now, with some one-third . . .

To say energy production is a complicated business is to say Catherine Zeta-Jones has pleasant features: it's an exercise in the obvious and the understated. But as obvious and as understated as it may be, it's still worth noting; complicated businesses demand sophisticated technology to coordinate and manage their many moving parts.

In electrical-energy production, Baltimore-based GSE Systems, Inc. (AMEX: GVP) provides an indispensable chunk of that sophisticated technology. Specifically, GSE provides simulation and educational solutions and services to the nuclear and fossil electric utility industry. The company boasts three decades of experience, totaling 343 installations and 100 customers in more than 40 countries.

Despite all the Hosannas directed at wind, recycled cooking oil and corn squeezins', GSE's clientèle of conventional electrical energy providers still rule the roost, and will continue to do so into the relevant future. Energy pundits expect a protracted cycle of nuclear and fossil fuel generation expansion and upgrade, and so does GSE. Management presages a renaissance in nuclear power generation both internationally and domestically that will provide significant opportunities.

On the international front, China has announced plans to build 40 new nuclear plants by 2020. Russia has also announced plans for 40 new plants by 2030. New plants are on the drawing board or under construction in Finland, Slovakia and Bulgaria. On the domestic front, numerous utilities are preparing applications for construction and operating licenses under the Department of Energy 2010 incentive program, a joint government-industry effort to identify sites for new nuclear power plants, develop advanced nuclear plant technologies and demonstrate new regulatory processes that should lead to new power-plant construction.

These macro industry events are starting to materialize into micro financial results. GSE recently reported third-quarter revenue of $7.5 million, a modest 3% increase over the $7.3 million posted in the third quarter of 2006. Net income attributed to common shareholders was $303,000, or $0.02 per share, compared to $337,000, or $0.04 per share, in 2006. Despite the drop in the year-over-year comparison, the EPS beat First Call estimates for $0.01 per share.