|
Favorite Stock: EPG
|
 |
June 21, 2001: 11:56 a.m. ET
Wachovia Funds' Swanson: El Paso Energy is silver lining in industry cloud
By Staff Writer Alexandra Twin
|
NEW YORK (CNNfn) - California's struggle to come up with a long-term solution to its power crisis has broad-ranging implications across the utility sector, and gas pipeline owner El Paso Energy Corp. is among the companies in focus.
"There are a number of companies that will play into this market in both the near- and long-term," said Tim Swanson, head of equities and portfolio management at Wachovia Funds, "El Paso Energy is one that stands to benefit above the average."
| |
|
|
Tim Swanson | |
Houston-based El Paso Energy (EPG: down $2.20 to $50.50, Research, Estimates), the nation's fourth-largest energy company, owns more than 50,000 miles of gas pipeline in the United States, Canada and Mexico. It acquired Coastal Corp. earlier this year in an example of consolidation in the energy industry.
With shares only about 15 percent above their 52-week lows, Swanson sees the stock as having solid upside potential.
Why does this stock stand out for you?
It's a large-cap company that deals in natural gas. Generally, utility is in the process of remaking itself into more of a growth sector than it has been. The situation in California is clearly a component in this. I think that the overall market will be up about 10 percent over the next year. I think that El Paso can outperform the market.
The stock is currently trading in the low 50s, around 15 percent above its 52-week low. What can investors expect from the stock in the next year?
I think it's got clear growth potential. I'm looking for shares to move at around $65 to $70.
Federal energy regulators are investigating charges that the company may have manipulated the price of natural gas last winter. Is this a long-term concern for potential stockholders?
I don't foresee that hurting the value of the stock in the long run. I have confidence in the management and in the stock's ability to stand out from the sector.
What other risks are inherent?
Right now, there is a real cloud hanging over the sector as a whole. But that shouldn't make investors nervous about investing in the stock. I think that whatever discount the market has placed on the company will lift over the next year.
What is your financial interest in the company?
It is owned by the Wachovia Fund. I would say it is a long-term investment. The fund owns it and it intends to keep it. 
* Disclaimer
|
|
|
|
|
 |
|
