Shares of NRG Energy (NRG) have taken a beating over the past 6 months dropping 30% since October. Shares have fallen from $29 to the low $20′s. NRG closed the week at $20.25. I first noticed NRG when Warren Buffett started buying shares in 2008. Buffett currently owns 6,000,000 shares.
NRG has been downgraded by Bank of America amid concerns of lower fuel prices. Bank of America has placed a $24 price target on the ultility firm. Citigroup downgraded NRG’s shares as well based on an expected decrease in profit fron declining dark spreads. Citigroup has a $25 price target on the stock. Goldman Sachs lowered its price target on NRG to $28 and has dropped the firm from its conviction buy list.
I am a big believer in buying shares of strong companies that have been beaten down. Analyst downgrades often signal a bottom for a stock. While shares are not a steal at $20, NRG is quickly becoming a value stock. It would be ideal to purchase shares around $17, since next year’s earnings are expected to be $1.20 and the five year EPS growth rate is 6%. This may be a good opportunity to start building a position in NRG. If commodity prices rebound NRG could rise significantly.
Hi there,
I do believe in the energy sector, currently own stocks in Fortum and E.ON (quite big in europe). This sounds like an interesting and solid company. I did notice however that they do not pay a dividend, which makes me a bit worried. Could not find any info on why they do not do it…
Regards,
SemiNice
@SemiNice
I think that NRG doesn’t pay a dividend because they are using extra cash to pay for new projects and expansion.