Home > Stock Market Buys > B NI @ 14.08

B NI @ 14.08

I have bought NiSource (NI) today at a price of 14.08.

NiSource is the holding company for a group of subsidiaries, primarily utilities in the Mid West and extending through New England.  While the company provides its customers with electricity and other products and services, it primarily focus is with natural gas, where it is involved with nearly every step in the process from storage and transportation to distribution.

At a PE of 14 based on this years expected earnings of just over a dollar, the company is competitively priced relative to its peers in the industry.  They operate primarily in a region (the Mid-West) that hasn’t been as impacted by the economy as either of the coasts, although they do have exposure in the New England area.

A lot of buzz has been created recently as people hype (and sometimes over-hype) natural gas as an effective “bridge” fuel until the alternative energy industry gains mass appeal.  It is clean-burning enough to satisfy the greens, and the major oil producers such as COP and BP have a large enough stake in it that is doesn’t face much opposition from fossil fuel backers.  Price destruction recently has made Natural Gas a cheap source of energy, helping it gain momentum. NI seems very well placed to deliver on the Nat Gas boom, as it has well developed distribution networks, and a built-in customer base serviced by their various utility companies.

Ni is due to post earnings on October 30, and analysts have a consensus estimate for a loss of $.03. The summer quarters typically have low earnings as natural gas is used for heating in the winter.

Disclosure: Long NI, long BP.

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