Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, energy products and services specialist Constellation Energy Group (NYSE: CEG ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Constellation's business and see what CAPS investors are saying about the stock right now.
Constellation facts
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Headquarters (Founded)
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Baltimore (1906)
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Market Cap
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$6 billion
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Industry
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Electric utilities
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Trailing-12-Month Revenue
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$14.2 billion
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Management
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CEO Mayo Shattuck, III (since 2001)
CFO Jonathan Thayer (since 2008)
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Return on Capital (Average, Past 3 Years)
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5.8%
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Cash/Debt
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$1.6 billion / $4.3 billion
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Dividend Yield
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3.2%
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Competitors
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Duke Energy (NYSE: DUK )
American Electric Power (NYSE: AEP )
Allegheny Energy (NYSE: AYE )
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Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.
On CAPS, 97% of the 912 members who have rated Constellation Energy believe the stock will outperform the S&P 500 going forward. These bulls include Hedgehogger and All-Star moneyrocket, who is ranked in the top 10% of our community.
A few months ago, Hedgehogger tapped Constellation as an electric opportunity:
Solid electricity producer. Savvy electric power merchant. Well connected in financial community and in Washington. Now they are joined at the hip with Electricite de France [EDF], the largest reactor owner in the world.
Thanks to the divesture of its noncore commodity segments, as well as the $4.5 billion sale for 50% of its nuclear fleet to EDF, Constellation has steadily recovered from its derivatives-related near-death experience in 2008. In fact, Constellation now sports a lower debt/equity ratio than rivals Duke, American Electric, and Allegheny. And with the stock down nearly 19% over the past three months, CAPS All-Stars like moneyrocket continue to see Constellation as a tantalizingly cheap turnaround situation:
The industry leader is [Exelon (NYSE: EXC ) ] which happens to be my favorite company in this industry. They have the best cost profile and best safety record that all other players are judged. unfortunately [Exelon] is not cheap nor a value play. But [Constellation] however is an interesting opportunity. Since I am a value investor, I'm not interested in Snow White. I am only interested in the cleaning girl who can turn into Cinderella. ...
If there is one type of business I absolutely love it's infrastructure; especially one you must buy to power what you would call civilization. The nice thing about this business is the high barrier to entry. You can't start a nuke plant overnight. Ever since the French cash infusion they have made important progress in reducing debt and thereby increasing their liquidity. ... They have continued to shed noncore assets in 2010. ... [I believe Constellation] is currently selling at 30% discount to book value and 55% discount to annual sales. ... The utilities as a group has not participated in the rally. The shares are worth at least $44.68 just on book value.
What do you think about Constellation, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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