National Grid: Britain's Best Power Play

04/04/2003 12:00 am EST


Roger Conrad

Chief Analyst/Managing Partner, Capitalist Times

America's three-year bear market, growing trade deficit, busted federal deficit, and crashing dollar are a few good reasons to keep some capital in some foreign-based investments," says Roger Conrad. Personally, if I was following the specific advice of any advisor in the general area of utility investing - electric, power generation, merchant, telecom, water, etc., I would ask for no better guide than this editor of The Utility Forecaster, the leading newsletter in the sector.


“Given the pasting that the London stock market has taken since the 1990s, it may seem strange to shop there for utilities. But we have found one top choice that is extremely powerful, exceptionally cheap, and wired for strong, steady growth. We consider National Grid Transco (NGG NYSE) to be a core holding. The company is going back to basics. After merging with Lattice Group last year, the company controls Britain’s power grid as well as its principal natural gas distribution infrastructure. It runs these for a few, leaving competition and commodity price risk to others. National Grid is now also doing the same thing in New England, having acquired three power transmission and distribution utilities and is prowling for more targets. 


“Lack of operating revenue and steady sales add up to powerful cash flows, and the company is putting these back to work by cutting debt and buying back its own shares. With its financial power, Grid – which is based in the United Kingdom and easily trades here as an ADR, is set for steady total returns of 105 (6.5% plus dividends) even if the overall environment remains sluggish. Buy National Grid up to $38”

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