Utility Sector Ideas

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CPFL Energia - >>> 3 Stocks to Get on Your Watchlist



By Sean Williams
September 26, 2012



http://www.fool.com/investing/general/2012/09/26/3-stocks-to-get-on-your-watchlist.aspx



CPFL Energia

I figured I'd start us off by looking at a very unloved electric utility company in Brazil, CPFL Energia. The utility has been under pressure recently because of expectations of slow GDP growth in Brazil (just 2% this year) and concerns that the Brazilian government may push to lower electric costs by as much as 10% to curb a further growth slowdown.

I'm looking at things a bit differently. I do see a competitive utility space and possible negative implications from a government reduction in electricity costs. However, over the long term I see Brazil significantly outperforming more industrialized nations, which affords a greater growth opportunity to CPFL. In addition to paying out a remarkably large dividend (which is given out semiannually), CPFL's entire energy lineup is renewable: thermoelectric, hydroelectric, biomass, and wind power plants. With big investments flowing into alternative energy, CPFL Energia is an attractive name that should remain near the top of your watchlist.

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