Sunday, April 17, 2016

Seeking Alpha: CPFL Energia One Of The Best ... And Priced Like It

It's tough out there for Brazilian utility companies, both in real-world market terms and the significantly fuzzier world of investor sentiment, and CPFL Energia's (NYSE:CPL) market performance would seem to lend more support to the notion that when times get tough enough, even the best get pulled down.

CPFL Energia has fared better than CEMIG (NYSE:CIG), COPEL (NYSE:ELP), Light (OTCPK:LGSXY), and Alupar over the past year with a roughly 3% decline in the local shares (and a 15% drop in the ADRs), and has lagged only Energias among the integrated distribution ("disco")/generation-transmission ("genco" and "transco") players in Brazil's electrical utility sector. Even so, it's been a rough stretch in the neighborhood as turbulence in the power industry, weakness in Brazil's economy, and a crisis of confidence in the equity and credit markets have done their damage.

As a company, I really like CPFL Energia. The debt level is high, but then so too is the near-term cash generation to cover it, and I believe there is a wide range of potential growth opportunities for the company. That said, everybody seems to agree that CPFL Energia is a well-run company and you don't often find bargains where there's that level of concordance.

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CPFL Energia One Of The Best ... And Priced Like It

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