Trade Idea – Engie

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The opportunity of opening a long position in Engie at 5y historic low price levels has been utilized on 10 November 2016. The purchase price of EUR 11.9 can be derived into a really significant dividend yield (~8%).

In line with its previously announced strategic targets the conglomerate will focus on the following main pillars in the future:

(1) activities with low CO2 emission (already made some steps to be a top global renewable generator)

(2) shifting the focus to contracted, regulated business; consequently limiting the exposure to the volatile commodity prices

(3) integrated customer solutions

These are really ambitious plans to provide a proper answer in connection with the collapsed comodity prices and to transform the 200y old energy group into a solid player of the new energy era. Majority of the analysts covering Engie’s business activites provided positive opinion on the future outlook of the company. Even in short-term we might realize some upside (taking into account the oversold measures and the high dividend yield).

Trade Idea – EDF

Long position in EDF (ISIN:  FR0010242511) opened on 24 February 2016 at EUR 9.32.

 

Key investment considerations:

  • one of the largest company in the depressed European power generation sector
  • recent extreme share price drop, 14d RSI is close to the oversold territory
  • significant dividend yield
  • potential recovery in electricity prices is the most important questionmark related to this investment