Zacks Industry Outlook Highlights: CPFL Energia S.A., AES, Cleco and Duke Energy - Press Releases
November 21 2011 - 3:30AM
Zacks
For Immediate Release
Chicago, IL – November 21, 2011 – Today, Zacks Equity Research
discusses the Alternative Energy, including CPFL Energia
S.A. (CPL), AES Corporation (AES),
Cleco Corporation (CNL) and
Duke Energy Corporation (DUK).
A synopsis of today’s Industry Outlook is presented below. The
full article can be read at
http://www.zacks.com/stock/news/64949/Alt-Energy+Stock+Outlook+–+November+2011
Historically, the growth outlook of alternative energy companies
has been inversely related to the prices of petroleum products and
directly related to the fortunes of the economy. In the near term,
however, the fortunes of the alternative energy players are
undergoing a radical transformation.
On one hand, the continuing European debt crisis has led to the
U.S. Federal Reserve reducing its growth forecast, raised
projections for unemployment and leaning on buying more mortgage
debt to tide over a troubled economy.
The U.S. economy was not able to completely shake off the negative
momentum that plagued it in 2010. In the first nine months of 2011,
the economy was affected by unseasonal and harsh weather,
heightened uncertainty spawned by the crisis in the Eurozone, a
drop in federal defense purchases, and the supply-chain disruptions
associated with the Japan quake and ensuing crisis.
As a result the U.S. jobless rate rose to 9.0% in October 2011.
Going forward, Zacks expects unemployment rate for fiscal 2012 and
2013 at 8.9% and 8.4%, respectively. U.S. Federal Reserve also
raised its projections for unemployment. This has led to
implementation of Operation Twist (sterilized large-scale asset
purchases) by Fed to lower rates.
As the Fed sells shorter-dated assets and uses the proceeds to buy
longer-dated securities, effectively removing duration from the
market, longer-dated yields will be kept lower than would otherwise
be the case. As a result, we now expect the 10-year Treasury note
yield to hover around 2.8% in fiscal 2012, reflecting both
persistent flight-to-quality effects and the impact of Operation
Twist.
We expect the Euro-area crisis to continue to cast a spell over
financial markets. The heightened uncertainty may contribute to
sharply lower equity prices and wider risk spreads. This we
invariably feel will lead to slow consumer spending and the general
pull-back from risk may yet manifest itself in hiring and capital
expenditure decisions.
This would not be a welcome environment for alternative energy
players who in recent times have been reeling under weak demand
owing to the supply glut. Faced with struggling economies,
regulators in Europe and U.S. may opt to be tight-fisted over
spending on alternative energy projects.
On the other hand, steadily rising oil prices and China’s new solar
power tariff regime is a clear pointer for investors to look beyond
the near-term earnings horizon for healthier performance. The U.S.
Energy Department in its monthly Short-Term Energy Outlook for
November increased its crude-oil price forecast for 2011 by 1.6%.
The agency now expects that the West Texas Intermediate oil will
average $93.80 a barrel in fiscal 2011, up from the October
projection of $92.36.
As a result, we believe that the oil price upside will only boost
the emerging positive alternative energy narrative.
According to the European Photovoltaic Industry Association (EPIA),
the world industry association for solar photovoltaic electricity
market, based on a study looking at five major solar markets --
Germany, Italy, France, Spain and Britain -- power generated from
solar modules in Europe could be competitive in relation to
conventional forms of energy by the end of the current decade.
A number of traditional utility companies have growing alternative
energy operations. But the fortunes of some of these companies,
particularly those with significant fossil-fuel exposures, are less
attractive than their peers.
Favorable rate cases and stable sales growth in the respective
service areas make companies like CPFL Energia
S.A. (CPL), AES Corporation (AES),
Cleco Corporation (CNL) and Duke Energy
Corporation (DUK) attractive.
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AES CORP (AES): Free Stock Analysis Report
CLECO CORP (CNL): Free Stock Analysis Report
CPFL ENERGI-ADR (CPL): Free Stock Analysis Report
DUKE ENERGY CP (DUK): Free Stock Analysis Report
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