The slump in the Contact Energy [CEN] share price on Tuesday due to a 23% profit downgrade is really of little concern to the long-term investor already owning shares in the company.It does provide an opportunity for those of us who would like to buy Contact shares though !
The downgrade had nothing at all to do with the global recession but was due mainly to bad luck, government red-tape and a gas shortage.
That doesn't mean the end of the world though.
Contact Energy still makes alot of money and will continue to do so long into the future and is a monopoly in various areas of its business
In fact it has been one of the better performers, profit and share price wise than any other stock listed on the NZX and it will do well during the recession.
The downgrade simply made the company a more attractive buy on Tuesday because the share price dropped by 10%.
The share price closed today at NZ$6.76, 16c up on yesterday's close and around 10% less than a week ago.
At a 52 week low of $6.29 this makes Contact Energy an essential on anyone's watchlist at the current share value.
Buy on weakness for a good long-term return.
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The End of a Natural Monopoly: Deregulation and Competition in the Electric Power Industry by Peter Grossman
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c Share Investor 2009
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