General Cable: "Wired for Success" (BGC)

The stock is extended, having better than doubled off the August 2010 lows and relative strength is falling.
That said, the decline halt at the 50-day moving average grabs one's attention.*

From Barron's:

From underground fiberoptics to underwater cable lines, General Cable is wired for growth.
As a maker of copper, aluminum and fiberoptic wire and cable products, General Cable (ticker: BGC) is well diversified both geographically and across industries, from utilities to infrastructure and telecommunications.

Yet the stock remains cheap on a historical basis, and its recent falloff despite reporting better-than-expected earnings could make a good entry point for investors.

"The stock is one of the most concentrated ways to play electric utility spending on a global basis," says Stifel Nicolaus analyst Jeffrey Beach. He estimates that the stock could nearly double, to $96.50, in the next three years, "as strong organic revenue growth drives margins at a rapid pace."

The company gets roughly 30% of its business from utilities, 28% from infrastructure, and 25% from communications, its three main divisions. It also gets approximately 70% of its revenue from overseas, which gives it diversity across the globe, across several industries, and exposure to early- and late-cycle markets.
This has helped General Cable stay strong throughout the progressive stages of the economic recovery and could provide more upside ahead.

"General Cable has yet to really see any material recovery in a lot of its end markets; construction and utilities are just starting to kick in, which, combined with advantages of scale, make it very attractive," says KeyBanc Capital Markets analyst Anthony Kure. "Margins aren't what they could be if there were more robust demand; its operating leverage is unappreciated here."

Kure estimates that the company could realize 15% to 20% incremental operating margins on the next $1 billion to $2 billion in revenue, allowing it to enjoy this growth without adding a substantial amount of fixed cost. His estimate of 2012 earnings per share of $3.80 assumes the low end of that range....MORE

Previously:

Feb. 4, 2011
UK investor buys 7% stake in General Cable (BGC)

These guys are a class act. Sarasin & Partners runs about $15 Billion.
The parent company Sarasin Group owns one of the best Swiss private banks....

Aug. 4, 2010
Transmission: "General Cable Has a Line on Growth" (BGC)

Transmission: "General Cable Has a Line on Growth" (BGC)

The infrastructure companies would have been the place to be had the politicians been telling the truth about where the stimulus money was going. Remember "Shovel Ready"?
Instead the dough went to puppet theaters and public sector jobs.

Now I know the problems of actually building productive assets and I know the differences between now and the 1930's when construction was much more labor intensive and you would get more jobs-bang for the buck.
And I know the problems with permitting and approvals that move any fast-track project into the far right lane.
But still...
Enough bleating, here's Barron's Hot Research:

Sterne Agee upgraded the infrastructure firm to Buy from Neutral.

General Cable (BGC: NYSE)
By Sterne Agee & Leach ($25.68, Aug. 3, 2010)
WE ARE UPGRADING General Cable (ticker: BGC) to Buy from Neutral and maintaining our $33 price target based on about 10 times 2012 earnings per share of $3.25.

While second-quarter 2010 volumes were below expectations, we are encouraged by General Cable's ongoing mix shift to Emerging Markets with exposure to Transmission spending in Brazil, Mining activity in both North and South America and exposure to faster-growth economies in Southeast Asia. In short, we think North America recovers slowly (about 2% volume growth modeled in 2011 and 2012), Europe excluding normal seasonality does not materially worsen and rest-of-world (ROW) continues to high single-digit to low double-digit volume growth. While excess industry capacity is likely to continue to put pressure on margins in developed markets in the near to intermediate term, we think this is largely known and discounted.
Second-quarter 2010 summary: On an adjusted basis operating income was $74 million versus our Street-high estimate of $68 million. General Cable reported non-GAAP EPS of 54 cents, in line with guidance. Excluding 17 cents of nonrecurring items, operating EPS was 71 cents versus our Street-high estimate of 65 cents. Volume in North America was below internal expectations as a result of MRO (maintenance, repair and operations), OEM (original-equipment manufacturers) and Networking slowing in May and June and volume within ROW segment was below internal expectations due to Transmission project delays in Brazil.
General Cable currently has $150 million in orders for Transmission projects in Brazil with deliveries expected to occur between late 2010 and 2012.

Our third-quarter EPS estimate of 47 cents (versus prior estimate of 55 cents) is within guidance of 43 cents-55 cents. Volumes in the third quarter are expected to be flat versus the second quarter with North America flat, Europe down, and ROW up 10%. We are adjusting our 2010 and 2011 EPS estimates from $2.15 and $2.50, respectively, to $2.09 and $2.45, respectively, and we are establishing a 2012 EPS estimate of $3.25.
-- Michael J. Coleman
-- Nicholas P. Heymann
-- Paul A. Dircks

Also at Hot Research:

• August 03 
• Be Patient With Merck
• August 02 
• Curb Your Enthusiasm for Waste Management

As can be seen from the chart the stock has worse-than-flatlined since the stimulus bill was passed.
Meanwhile the executive director of the puppet theater was quoted as saying ""An employed artist is as valuable as an employed computer programmer, employed plumber, employed contractor, employed construction worker."

Idiot.
See also:
"Krugman Says U.S. Economy Is Facing a ‘Long Siege’" and Whatever Happened to "Shovel Ready?"

Obama Stimulus Slow to Buoy ‘Real Economy’ as Marin Awaits Cash

Pity poor Marin. Caught between Sonoma and San Francisco.
Scraping by on a median income of $83,870 (highest in Cali.).
The squalor of Sausalito:

tiny small medium large original Image from Geoffrey Mainland
Okay, sarc off. Here's the story from Bloomberg...

Electric Cable Giant, Prysmian S.p.A. Closes At All-Time High (PRY.MI)

They are also big in optical fiber cabling but since they bought America's General Cable Prysmian is far-and-away the class of the field.

No news, just stock action. From TradingView, one year of daily prints:

 

88.00 euros last, up €3.76 (+4.46%)

It is often a positive indicator when a stock closes at its high for the day. Day's Range €84.28 - €88.00

For the year. 52 Week Range €38.57 - €88.00

Forever. 

If interested see also:

July 2024 - Transmission/Grid: Prysmian Has Received A €450 million Contract From The European Investment Bank (PRY:Milan)
Time to string some lines.This is the name for transmission cable.

January 2024
"There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
April 2024
Grid: How U.S. Electrical Transmission Lines Will Be Rebuilt—Reconductoring
April 2024
Electrical Transmission: Speaking Of The Farsighted Italians...

Our interest had been in General Cable which PRY snatched up in 2017, as noted in the reconductoring post.

June 2025

"Reconductoring: Building Tomorrow’s Grid Today" ("same towers, better wires")

Prysmian S.p.A., World's Largest Electrical Cable Manufacturer Reports Earnings, Beats Expectations, Trades To All-Time High (PRY:Milan)

Another member of our hyper-concentrated electrical mini-portfolio.

From TradingView through April 30:

 

127.95 euros up 3.60 (+2.90%) at the close. The ATH was at 131.00 euros intraday. 

Up 47.75% Year-to-date and 167.57% over the last twelve months.

From Investing.com, April 30, 2026:

Earnings call transcript: Prysmian Q1 2026 beats expectations, stock rises 

Prysmian reported robust Q1 2026 results, with revenue reaching EUR 5.2 billion, surpassing the forecast of USD 5.11 billion. The company demonstrated strong organic growth and a significant increase in EBITDA, driving a 3.96% rise in its stock price. This performance reflects Prysmian’s strategic initiatives and operational efficiency, positioning it well for future growth.

Key Takeaways

• Revenue exceeded forecasts, reaching EUR 5.2 billion with 5% organic growth.
• EBITDA grew by EUR 80 million year-over-year, with a notable margin expansion.
• Stock price increased by 3.96%, reflecting strong market confidence.
• Strategic contracts with hyperscalers indicate future growth potential.
• Forex impact was a headwind but is expected to decrease in upcoming quarters.

Company Performance

Prysmian’s performance in Q1 2026 was notably strong, with revenue and EBITDA significantly exceeding expectations. The company achieved a 5% organic growth in revenue, driven by robust performance across multiple business segments. This growth underscores Prysmian’s effective operational strategy and its ability to capitalize on market opportunities.

Financial Highlights

• Revenue: EUR 5.2 billion, up 5% organically.
• EBITDA: Increased by EUR 80 million year-over-year.
• EBITDA Margin: Expanded to 14.2% from 13.1% in Q1 2025.
• Net Profit: Nearly EUR 250 million, described as "outstanding."

Market Reaction

Following the earnings announcement, Prysmian’s stock rose by 3.96%, trading near its 52-week high of $148.90. This positive market reaction reflects investor confidence in the company’s strategic direction and its ability to deliver strong financial results. The stock has delivered a remarkable 162% return over the past year, though InvestingPro analysis suggests the shares are currently trading above their Fair Value. According to InvestingPro, Prysmian boasts a perfect Piotroski Score of 9, indicating exceptional financial strength. The company’s "GREAT" financial health rating and attractive PEG ratio of 0.41 suggest strong earnings growth potential relative to its P/E ratio of 29.81. Investors seeking deeper insights can access 14 additional ProTips and comprehensive metrics on the platform.

Outlook & Guidance

Prysmian’s forward guidance remains positive, with EPS forecast to reach $5.41 for FY2026, up from $5.06 in the last twelve months. Revenue forecasts indicate 6% growth ahead. The company is pursuing long-term agreements with hyperscalers, which are expected to drive future revenue. Additionally, Prysmian plans a 40% increase in global optical fiber and cable capacity to support its growth strategy. For investors seeking comprehensive analysis, the company is among the 1,400+ US equities covered by InvestingPro’s detailed Pro Research Reports, which transform complex financial data into actionable intelligence.

Executive Commentary

CEO Valerio Battista stated, "Our strong Q1 2026 results demonstrate the effectiveness of our strategic initiatives and our commitment to delivering value to our shareholders." He emphasized the importance of the company’s agreements with hyperscalers as a key growth driver.

Risks and Challenges

• Forex impacts, although expected to decrease, remain a concern.
• Margin pressure in the Power Grid segment due to cost inflation.
• Potential supply chain disruptions could affect future performance.
• Competitive market dynamics in the fiber optics industry.
• Economic uncertainties that may impact global demand.

Q&A

During the earnings call, analysts inquired about the impact of forex fluctuations on future earnings and the company’s strategy to mitigate these effects. Prysmian’s management highlighted their focus on operational efficiency and strategic contracts to offset potential challenges.

Full transcript - Prysmian L (0NUX) Q1 2026:

Operator: Good day, and thank you for standing by. Welcome to Prysmian Q1 2026 Integrated Results webcast and conference call. I’d now like to hand the conference over to Massimo Battaini, Chief Executive Officer of Prysmian. Please go ahead, sir.

Massimo Battaini, Chief Executive Officer, Prysmian: Thank you. Good morning to everyone, and welcome to the earnings call for Q1 2026. We’re very excited to share our Q1 result that is well ahead of our expectation. When I say well ahead, I mean almost EUR 50 million upside over what we budgeted for Q1 2026. What is mostly settling is that the growth in EBITDA between Q1 2025, 2026 has been mainly achieved organically. If you take this EUR 80 million increase and you harmonize and neutralize the Forex, this will lead to a EUR 120 million growth in EBITDA, out of which China representing only EUR 40 million of this EUR 120 million. Also outstanding is the EBITDA margin in the quarter, 14.2%. 1.1 percentage point higher than what we recorded for last year.

With this set of result, can confirm that we are well on track to achieve the 2028 Capital Markets Day target of EUR 3 billion and plus, and also very confident to be able to hit the upper part of our guidance for 2026. Namely, well above the EUR 2.7 billion, EUR 2.7 billion of the midpoint. Before moving to the usual business by business review, I like to share with you some exciting news about the further expansion that we can have in the data center space through striking long-term agreements with the hyperscalers. These agreement are gonna be finalized in the coming weeks. Instrumental and fundamental to achieving this agreement is our footprint in terms of product and asset that we have in U.S....

....MUCH MORE 

The Q&A gives some insight into how the various markets addressed by the mini-portfolio, PWR; CCJ; FSLR; GEV come together.

 

For what it's worth this is, like the four above symbols, another "Best of breed" sort of company.

 

As noted in October 2025's "Electric Cable Giant, Prysmian S.p.A. Closes At All-Time High (PRY.MI)":

They are also big in optical fiber cabling but since they bought America's General Cable Prysmian is far-and-away the class of the field....

That was at 88.00 euros.

If interested see also:

July 2024 - Transmission/Grid: Prysmian Has Received A €450 million Contract From The European Investment Bank (PRY:Milan)
Time to string some lines.This is the name for transmission cable.

January 2024
"There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
April 2024
Grid: How U.S. Electrical Transmission Lines Will Be Rebuilt—Reconductoring
April 2024
Electrical Transmission: Speaking Of The Farsighted Italians...

Our interest had been in General Cable which PRY snatched up in 2017, as noted in the reconductoring post.

June 2025

"Reconductoring: Building Tomorrow’s Grid Today" ("same towers, better wires")

Transmission: Southwest Power Pool Gives Preliminary Approval for $1.3 Billion in 'Priority Projects' (BGC; PWR)

Neither Quanta Services (PWR) or General Cable (BGC) would be named at this early stage of the approval process for these projects but are almost certain to be beneficiaries of what appears to be one of the larger packages of high-voltage power lines I've seen.
Quanta specializes in the engineering while General Cable specializes in, well, cable.

As the CEP's Dr. Hazlett emailed a couple weeks ago:

...According to a source in the know at the recent 2009 KS Wind conference, "Kansas has pretty much maxxed out its available transmission for large wind farms until more lines get built. One major 345 line is underway and will be built by 2012, and hopefully another high voltage line of 765 or 345 will be approved by January and maybe built by 2014. However, in the meantime, there's lots of transmission congestion and existing wind farm production often has to be curtailed."

Just imagine what is going to happen to wind development in states where the transmission planning process is stalled or not even underway yet. I hate to think that wind could hit a major wall like that, but unless we act fast it's coming....

From the Climate+Energy Project blog:

SPP provisionally approves Priority Projects – including Wichita KS to Spearville KS 765 kV transmission line – for additional study and possible January 2010 final vote

From the SPP – will be up on their website soon: (EDIT: click here) EDIT 2: Note, the SPP also got a lot figured out on highway/ byway cost allocation, and the Integrated Transmission Plan.

FOR IMMEDIATE RELEASE
Emily Pennel, Southwest Power Pool Communications Manager
501.614.3337 • epennel@spp.org

SPP Priority Transmission Expansion Projects Endorsed, Pending Further Study

October 27, 2009, LITTLE ROCK, ARKANSAS – Today the Southwest Power Pool, Inc. (SPP) Board of Directors approved a package of transmission expansion “Priority Projects” for further analysis and review by regional stakeholders with oversight from the Strategic Planning Committee and in coordination with the Markets and Operations Policy Committee. In January 2010, the following Priority Projects will be presented for approval to the Board of Directors and Regional State Committee of state regulators:
• 765 kV line in Kansas linking Spearville, a planned substation in Comanche County, Medicine Lodge, and Wichita, operated at 345 kV at an estimated cost of $518 million
• 765 kV line linking a planned substation in Comanche County, Kansas to the planned Woodward District EHV substation near Woodward, Oklahoma operated at 345 kV at an estimated cost of $135 million
• 345 kV double circuit line linking the Hitchland substation south of Guyman, Oklahoma to the planned Woodward District EHV substation near Woodward, Oklahoma at an estimated cost of $237 million
• 345 kV line from Cooper in the southeast corner of Nebraska through Maryville, Missouri to Sibley (just east of Kansas City, Missouri) at an estimated cost of $278 million
• 345 kV line from Valliant in southeast Oklahoma to Texarkana on the Texas-Arkansas state line at an estimated cost of $131 million
• 138 kV reactor at a Tulsa, Oklahoma power station at an estimated cost of $842,000

Total engineering and construction costs are approximately $1.3 billion. Further analysis will be conducted, but the benefits of these projects are expected to exceed costs over the life of the projects, which is 30-40 years....MORE

"How the NSA Financed Atlantic Cable For HFT"

From Amsterdam Trader, Oct. 6, 2015:

There’s a new episode in the speed race among the top HFT shops. The Express cable under the Atlantic ocean by Hibernia Networks is finally finished. It has taken years longer than expected, but now it’s pretty fast. It takes 59.5 58,95 milliseconds for a round trip across the Atlantic ocean. That’s six milliseconds faster than the former speed king, the Atlantic Crossing 1 line of Level 3 Communications. 

As usual, time is money. The high speed cable rent will set you back for $20 million for five years. That’s $333k per month. A slower version (62,5 ms) is only $35k a month. The 59.5 line (which is in reality 58.95) is guaranteed by Hibernia. If they fail to deliver, you’ll get your money back. 

PRISONERS DILEMMA
To be honest, such a fast cable connection isn’t contributing much to the general welfare. Utility is zero. That’s why all HFT shops declined the offer. They figured correctly higher speeds won’t mean a thing, if everybody else has it. Just more expenses. Future for the planned cable wasn’t very bright, with all HFT firms closing the ranks and refusing to sign up. Without clients and upfront payments, it would be impossible to finance the cable. 

NSA TO RESCUE
Turned out the HFT firms weren’t the only ones interested in fast connections. The NSA and the US Army decided to sign up for the cable. They became key investor, and made financing for the cable possible. The pact of HFT firms to boycott the new Express cable broke down. Thanks to the NSA, all HFT firms were forced to pay down the $20 million. Pay in advance. Any HFT firm not using the fast Express line would be out of business. Their competitors will use the line. 

Why NSA and the US Army would want to be a mere six milliseconds faster than the previous cable is beyond me. Maybe it’s because of the drone age. Or maybe the Hibernia sales men chuckle how they made up a fantasy NSA story and tricked all HFT’s into paying millions. Who knows (well, maybe @Snowden knows).....MORE

Transmission: "General Cable Hit by Weak Construction Market" (BGC)

The stock was recently trading down $3.04 (7.88%) at $35.56.
From Barron's Tech Trader Daily:

Shares of $2 billion market cap General Cable (BGC), a maker of ethernet wiring for corporate data centers, are selling off in a big way after the company beat Q3 expectations but forecast the current quarter below expectations.

Rising metals costs are threatening profits, the company said, and continued fall-off in non-residential construction also means lower profitability. The company expects to trim production this quarter, though it did not say by how much....MORE

UK investor buys 7% stake in General Cable (BGC)

These guys are a class act. Sarasin & Partners runs about $15 Billion.
The parent company Sarasin Group owns one of the best Swiss private banks.
From the Cincinnati Business Courier:

A UK-based investment firm, Sarasin & Partners LLP, has acquired a 7 percent stake in General Cable Corp., according to a report filed with the Securities & Exchange Commission on Friday.
Sarasin said it owns more than $3.7 million shares for clients.

The filing indicates it bought the shares prior to Dec. 31, in which case it has been a nice investment to date. The shares have been setting new 52-week highs above $40 this week and are up sharply from the mid-20s as recently as last October....

Transmission/Grid: Prysmian Has Received A €450 million Contract From The European Investment Bank (PRY:Milan)

Time to string some lines.This is the name for transmission cable. 

Press Release from the company, July 24:

EIB provides €450 million to Prysmian to promote European energy transition 

• Operations will take place in Finland, Italy and France.
• The new funds will go towards manufacturing extra-high-voltage submarine power cables and high-voltage onshore cables, and other upgrades to existing cables.
• The project supports the objectives of REPowerEU, for which the EIB has earmarked additional financing of €45 billion by 2027.

The European Investment Bank (EIB) and Prysmian, world leader in the power and telecom cables sector, have signed a new, €450 million finance contract to facilitate electricity transmission and distribution in Europe.

With a view to meeting the growing demand for renewable energy in general and offshore wind in particular, Prysmian will use the EIB funds to build new production lines for extra-high-voltage submarine cables, lines for high-voltage onshore cables and other technical improvements to existing lines.

The EIB-financed investment will enable Prysmian to double its production capacity for extruded cables at its three factories in Pikkala (Finland), Pozzuoli (Italy) and Gron (France) from around 2 000 km a year to over 4 000 km a year. This will help to meet EU targets for clean energy transmission via submarine cable solutions and long-distance interconnections, improving the integration and efficiency of renewable energy.

According to Prysmian estimates and in line with time frames and procedures that are still being defined, this investment will also promote the creation of new jobs, thereby generating major economic benefits for the countries involved.

The project is fully in line with the EIB’s climate action and environmental sustainability goals and the REPowerEU framework, which the EU bank has committed to support with €45 billion of additional investment by 2027. In addition, almost half of the operations covered by the agreement will take place in cohesion regions such as Campania in Italy and Burgundy in France, thereby helping to address regional economic disparities and promoting more balanced and inclusive economic development....

....MUCH MORE

The stock is sort of boring:

5 years of prices via TradingView  

In a good way. 62.00 EUR up 0.50 (+0.81%) last.

Previously:

January 2024
"There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
April 2024
Grid: How U.S. Electrical Transmission Lines Will Be Rebuilt—Reconductoring
April 2024
Electrical Transmission: Speaking Of The Farsighted Italians...

Our interest had been in General Cable which PRY snatched up in 2017, as noted in the reconductoring post.

That's A New All-Time High For Quanta Services (PWR)

And another for electrical cable giant Prysmian S.p.A, (PRY.MI).

From Investor's Business Daily:

Breakout Watch: Top Funds Fire Up This AI Infrastructure Stock 

The artificial intelligence revolution continues to drive demand far beyond the likes of Nvidia (NVDA), Palantir Technologies (PLTR) and Alphabet (GOOGL). AI infrastructure stocks like Quanta Services (PWR) and Emcor (EME) have also attracted big bets from Wall Street.

Showing unabated demand for AI stocks, Quanta Services and Emcor joined Nvidia, Alphabet, Palantir on the latest monthly report on new buys by the best mutual funds, As Quanta trades near a buy point and Emcor remains in buy range, they also join Alphabet on the Investor's Business Daily Breakout Stocks Index.

Quanta Services Rides AI Infrastructure Boom And Beyond

Based in Houston, Quanta Services provides specialized infrastructure solutions to the utility, renewable energy, technology, communications, pipeline and energy industries. With operations throughout the United States, Canada, Australia and other international markets, the company's services include designing, installing, repairing and maintaining energy and communications infrastructure.

Strong demand for AI data centers has also boosted demand for Quanta's electrical and other systems.

Top money managers scooped up over $414 million worth of Quanta Services in the latest list of new buys by top funds. They also poured over $649 million into Emcor.

In the second quarter, Quanta Services generated more than $6.73 billion in revenue, marking a 21% year-over-year gain. Earnings growth rose 31% to $2.48 per share.

When the company reports third-quarter numbers on Oct. 30, analysts forecast 14% sales growth to around $7.38 billion. Earnings are expected to grow 20% to $3.26 a share.

For the full year, Wall Street sees earnings rising 18% to $10.57 per share, followed by a 17% gain to $12.39 per share in 2026.

AI Demand Fuels Buy Zone 
With the tech-heavy Nasdaq notching new highs but now encountering some resistance, Nvidia — Tuesday's IBD Stock Of The Day — Palantir and fellow AI infrastructure play Emcor all trade in or near a buy zone.

Shares of Quanta Services stand near a record high after clearing a 424.94 buy point in a second-stage cup pattern. But on Tuesday, the stock retreated below that entry as the market got jittery. As investors wait to see how Quanta Services holds up and how it reports on Oct. 30, the latest chart pattern and positive technical signs remain intact.

At the beginning of the month, the 21-day exponential moving average climbed back above Quanta's 50-day line and it continues to rise. It is a telltale clue of improving technical strength when a shorter-term moving average retakes its longer-term cousin.

In a sign of market leadership, the relative strength line has turned higher, but remains shy of its 52-week high.

Its strong industry group provides another promising indicator for Quanta Services. With a 97 Composite Rating out of a best-possible 99, Quanta sits among the leaders in the Building-Heavy Construction group, which ranks a lofty No. 14 among the 197 industries IBD tracks. Stock market history shows that the top-performing stocks often hail from the top-ranked industry groups....

....MORE 

The stock is up $13.57 (+3.22%) at $435.08 after setting the new ATH at $435.85.

And Prysmian S.p.A,?

As we mentioned in October 2's "Electric Cable Giant, Prysmian S.p.A. Closes At All-Time High (PRY.MI)":

They are also big in optical fiber cabling but since they bought America's General Cable Prysmian is far-and-away the class of the field....
****
...88.00 euros last, It is often a positive indicator when a stock closes at its high for the day. Day's Range €84.28 - €88.00

For the year. 52 Week Range €38.57 - €88.00

Forever....

Today the stock is changing hands in Milan at 91.18 euros, up €3.72 (+4.25%) after trading as high as €91.50. 

HBR: "Lobbyists Are Behind the Rise in Corporate Profits"

From the Harvard Business Review, May 26, 2016:

Profits are up. Operating margins for firms publicly listed in the US show a substantial and sustained rise. Corporate valuations are up as well. That is good news for managers and investors. But is it good news for society?

Economists such as Joseph Stiglitz and Luigi Zingales find the rise potentially troubling for two reasons. First, higher profits create greater economic inequality. Rising aggregate profits correspond to a decline in labor’s share of output, contributing to stagnant wages. Also, greater profits for some corporations but not others may create greater wage inequality.

Second, the rise in profits might represent a decline in competition and, with that, a decline in economic dynamism. While a dynamic, competitive economy rewards innovative firms with high profits and punishes poor performers with low profits, sustained aggregate profits suggest, instead, that firms are able to get away with higher prices because competition is limited. Firms engage in political “rent seeking”—lobbying for regulations that provide them sheltered markets—rather than competing on innovation. If so, then high profits portend diminished productivity growth.

But there is a more optimistic narrative about the rise of profits. Perhaps profits are rising because firms are increasingly making profitable investments in new technology, in IT, or in their organizational capabilities. In this account, high profits represent increased economic dynamism.

So which is it — political rent seeking or cutting-edge investments? In a new research paper, I tease apart the factors associated with the growth in corporate valuations relative to assets (Tobin’s Q) and the growth in operating margins. I account for the roles of R&D, spending on advertising and marketing, and on administrative costs, including IT. I also consider investments in lobbying, political campaign spending, and regulation; and I look for links between rising profits and industry concentration and stock volatility.

I find that investments in conventional capital assets like machinery and spending on R&D together account for a substantial part of the rise in valuations and profits, especially during the 1990s. However, since 2000, political activity and regulation account for a surprisingly large share of the increase.

Much of this result is driven by the role of regulation, so it is important to understand the link between regulation and profits. Lobbying and political campaign spending can result in favorable regulatory changes, and several studies find the returns to these investments can be quite large. For example, one study finds that for each dollar spent lobbying for a tax break, firms received returns in excess of $220.

It is less obvious, however, that regulation in general should be associated with higher profits. Indeed, critics of the regulatory state regularly decry the costs imposed by regulations. Yet even regulations that impose costs might raise profits indirectly, since costs to incumbents are also entry barriers for prospective entrants. For example, one study found that pollution regulations served to reduce entry of new firms into some manufacturing industries.

Even when regulators try to reduce prices, firms can benefit. For example, in 1992 Congress passed the Cable Television Consumer Protection and Competition Act in response to high cable TV rates. Regulators expected cable prices to fall by 10%. Instead, however, cable companies changed their programming bundles, prices did not fall, and corporate valuations increased. The chart below shows that the aggregate market value of cable companies relative to assets (Tobin’s Q) rose following the Act, compared to valuations of other firms....MORE

HT: thanks to a reader.

Utility Infrastructure: Addressing the Aging Electric and Water Systems (ABB; BGC; PWR)

The three I'm most interested in are ABB, General Cable and Quanta. Although there's no immediate catalyst to greater-than-market returns right now they are on the screen.
From Equities Magazine via NASDAQ:

While the U.S. population in general continues to be enamored by the constant stream of new technology “toys” being offered on a daily basis, they pay little attention to the technology that powers the gadgets—the nation’s electric grid.

And while they spend untold millions of dollars a year on bottled water to drink—which, science is now showing, is often no safer than tap water and thousands of times more expensive, not to mention the ecological disaster of the discarded plastic bottles—they pay little attention to the water that comes into their homes for cooking, showering, and washing clothes and dishes.

In sum, people take the electric grid and the water infrastructure for granted. There is a serious problem with this thinking. These infrastructures were designed for lives of 40 to 50 years, but are both now 100 years old in certain parts of the country. The electric grid is collapsing over our heads, and the water infrastructure is disintegrating below our feet.
Governments, businesses and the public in general are finally starting to take notice, though, and they don’t like what they see. Despite the fact that they would like to continue to use money for more “fun” things, it is becoming increasingly evident that money absolutely must be spent on utility infrastructure. It’s much like the homeowners who enjoy spending discretionary income on remodeling and decorating projects, only to find that their homes’ foundations are cracking and must be repaired.

According to John Rogers, CFA, senior vice president and managing director of institutional research for D.A. Davidson & Co., things are on the move. “Much of the federal stimulus packages have been targeted at upgrading various types of infrastructure, such as roads and grids,” he says. In addition, according to Rogers, it seems that there is more “political will” and interest in spending on infrastructure. “Politicians in particular are getting more interested in funding some of it,” he notes....MORE

By William Atkinson

HT: Dr. Hazlett at The Climate + Energy Project.

Quanta Services Was IBD's Stock Of The Day (PWR)

From Investor's Business Daily, September 11:

Stock Of The Day: AI Play Quanta Services Flashes Buy Signal After Oracle Boom 

Although a heavy-construction company, Quanta Services (PWR) — the IBD Stock of the Day — is arguably an AI stock.

The company builds electric plants and provides other services for the power grid. The need for artificial intelligence computations is fueling a boom in data centers, which require massive amounts of electricity. In addition, many companies are shifting manufacturing into the U.S., resulting in more factory construction.

That investing thesis got momentum late Tuesday, when Oracle (ORCL) said its backlog for AI-related cloud computing capacity is brimming with orders. The tech stock soared 36%.

In the most recent analyst note, Mizuho initiated coverage of Quanta stock last week with a neutral rating and 360 price target.

Quanta is in a good spot to benefit from a grid and electrification supercycle, with secular growth in data centers, grid modernization and clean energy projects, analysts said. Mizuho's total addressable market forecasts are above consensus, TheFly.com quoted the analysts saying. Within the industry, Mizuho sees Quanta as the scale leader with a premium valuation.

Half of the 34 analysts who cover Quanta have buy or outperform recommendations on the AI stock, and most others have hold ratings, FactSet shows. The average price target is 426.96, implying a 7% upside from today's price around 398.

For the full year, analysts polled by FactSet expect Quanta Services earnings to climb 17.8% to $10.57 a share. Sales are estimated to rise 16.8% to $27.654 billion. Analyst estimates have been trending higher.

Quanta has a market cap of more than $59 billion, the highest of 25 stocks in the heavy construction industry group. Last year, 74% of revenue came from utility and power customers. Its other businesses include pipelines and broadband infrastructure.

The Houston-based company has an IBD Composite Rating of 97. That's only the seventh highest in the group, which underscores the strength in the No. 6-ranked industry out of the 197 industry groups IBD tracks....

....MUCH MORE 

Along with GE Vernova, PWR caught a shout-out from Goldman Sachs in May 2024:

Goldman Sachs' Picks For Data Center Electricity Demand Growth 

Long-time readers have known Quanta's name for a couple decades as well as that of one of the predecessor companies of electrical cable maker Prysmian S.p.A. (PRY.Milan), General Cable.  

 

TradingView, five year chart

New all time high for PRY today, 80.90 euros 

The three companies, GEV; PWR, PRY comprise our end-to-end "class act" mini-portfolio for rewiring the world. 

If interested see also:

• "There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
• Grid: How U.S. Electrical Transmission Lines Will Be Rebuilt—Reconductoring
• Electrical Transmission: Speaking Of The Farsighted Italians...

First Trust Rolls Out Electric-Grid-Linked ETF (GRID)

UPDATE: "Reviewing the New Smart Grid ETF (GRID)"
From Index Universe:

...The First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund (Nasdaq: GRID) will track the Nasdaq OMX Clean Edge Smart Grid Infrastructure Index, which is a modified market capitalization index, comprises companies involved in electric grid, meters, devices and network, energy storage and management, and sector-related software.
Started in September, the index holds some 30 names.

Index Components As Of Nov. 17
NGK Insulators	53330
ABB Ltd	ABBN
Advanced Energy Industries	AEIS
American Superconductor	AMSC
General Cable	BGC
Cooper Industries Plc	CBE
Comverge Inc	COMV
Digi Intl Inc	DGII
Echelon Corp	ELON
EnerNoc Inc	ENOC
ESCO Technologies Inc	ESE
General Electric Co	GE
ITC Holdings Corp	ITC
Intellon Corp	ITLN
Itron Inc	ITRI
Jinpan Intl Ltd	JST
Mastec Inc	MTZ
National Grid PLC	NG.
Pike Electric Corp	PIKE
Power-One Inc	PWER
Quanta Services Inc	PWR
Ruggedcom Inc.	RCM
SMA Solar Technology AG	S92
Satcon Technology Corp	SATC
Schneider Electric SA	SU
Siemens AG	SIE
Telvent GIT SA (US Listing)	TLVT
Valmont Industries Inc	VMI
WESCO Intl Inc	WCC

"With a growing demand for electricity and the increasingly inefficient infrastructure, the current power grid is unable to keep up with the twenty-first century technology," Ryan Issakainen, vice president, exchange-traded fund strategist for First Trust Portfolios, said in a release....MORE

"The China Thrill is Gone and I Miss It"

From China Law Blog, February 21:

When Xi Jinping took office in 2013, I—like many others—hoped that his leadership would improve China’s trajectory. But over time, my optimism faded as the country became more repressive, and the spaces I once enjoyed began to disappear.

I was living in Shenzhen in 2013. Whenever I read Western media hopes that Xi might potentially be China’s Gorbachev, I recalled one of my courses at the Foreign Service Institute (FSI) in Virginia, which among other topics covered cable-writing (a cable is basically a report, in the State Department’s fusty parlance). In one class, a 2000 cable from the Moscow Embassy was hailed as the epitome of what good reporting from the field looks like. The topic was Vladimir Putin’s recent ascension to power, and the reporting officer made the bold claim (based on a careful analysis of Putin’s track record) that he would be a reformer. To be fair to FSI instructors, I took the course in 2004, when it was not quite as clear that the cable’s predictions were totally wrong.

This historical cautionary tale, along with insights from my Chinese friends about Xi’s background, led me to have no illusions that he would be a democratic reformer. That said, I felt he would probably be an improvement over drab Hu Jintao, whose vision for China appeared uninspiring. I even posted a syrupy message on WeChat wishing President Xi the best on his mandate and hoping that China would be a better place at the end of it, or something along those lines.

My disenchantment took place gradually, yet there were a couple of moments that have stuck with me. A few months after Xi took office, I moved to Hong Kong but continued to travel to the Mainland regularly for business. As happens when you stop seeing a place regularly, changes become more noticeable. One evening, while walking around Shamian Island in Guangzhou, I saw what can only be described as a big character poster along the driveway of a government building—something I had never previously encountered in the city.

Big character posters (大字报) were a hallmark of Mao-era propaganda and public denunciations, so seeing one in modern Guangzhou was deeply unsettling. While propaganda was not uncommon in China, Guangzhou had always struck me as a pragmatic, commerce-driven city with little time for ideology. In fact, a tiled announcement calling for compliance with family planning rules in one of the alleys near the Garden Hotel stood out as a relic — to the extent that I made a point of photographing it....

....MUCH MORE

As noted in a March 2024 post:

....Fifteen years ago Chinese Gen X and millennials were saying “It’s basically impossible to lose money from buying apartments.” 

The 2008 Beijing Olympics and the next half-decade were probably the high-water mark for the national mood, nothing was impossible. Then in November 2012 Xi Jinping took over as General Secretary of the Chinese Communist Party from Hu Jintao, the government, central bank and the Party goosed the economy by way of construction for the next seven years but it was all a debt-fueled mirage.

Over the years I've mentioned my thinking on China had changed sometime in the mid-twenty-teens:

2019

In 1980 China's GDP per capita was $312.
In 2017 China's GDP per capita was $8,836 with purchasing power parity being $17,015.
The world has never seen anything like it.

2021

....I had a similar road to Damascus moment, though later, maybe 2015, 2016.

In 2012 I was still pro-China and immensely pro Deng :

Deng Xiaoping Smiles: Peoples Daily Online is Doing an IPO
Peoples Daily Online is the website of the flagship newspaper of the Communist Party of China.
Deng Xiaoping helped lift 1,000,000,000 Chinese out of subsistence poverty* with his pragmatic market reforms:

"Do not care if the cat is black or white, what matters is it catches mice"

*Real GDP per Capita 1980-2009 (2010: $7,600):

1980 $   531.41
2009 $6,309.15 

 

But Xi? He's a whole different kind of cat . I keep waiting for him to pull a Hitler line out of his pocket:

'This is my last territorial demand in Europe' 

 —Adolf Hitler 

speech in Sportpalast Berlin, September 26, 1938

 

But Xi would say "My last territorial demand in Asia"

I think.

Transmission Builders and Suppliers (ABB; AMSC; BGC; PWR)

A handy table from Tom Konrad's AltEnergyStocks post "2010: The Year of the Strong Grid? Part II":

(...If Cash Flow from Operations (CFO) is positive, then T = (Total Liabilities (L) - Cash)/ CFO - the time it will take to pay off debt using internal cash flows and cash on hand. I consider anything less than a few years good....)

Company	Current Ratio	T	P/E (trailing)	Yield
ABB Group (ABB)	1.7	instantly	16.7	2.3%
American Superconductor (AMSC)	2.8	instantly	N/A	0
Composite Technology Corp (CPTC.OB)	0.6	N/A	N/A	0
CVTech Group (CVT.TO)	1.5x	7 years	24	0
General Cable (BGC)	2.1x	instantly	12.3	0
Jinpan International (JST)	2.3x	6 months	10.6	0.6%
MasTec (MTZ)	1.7x	2 years	13.9	0
MYR Group (MYRG)	1.6x	instantly	16.7	0
Pike Electric (PIKE)	2.3x	1 year	27	0
Quanta Services (PWR)	3.6x	instantly	19	0
Resin Systems (RSSYF.PK)	I could not find current financial statements.
Siemens (SI)	1.2x	13 years	10	2.6%
Valmont Industries (VMI)	2.6x	instantly	12.8	0.8%
Wesco International (WCC)	2.2x	2 years	9.2	0

...In general, the companies in this industry show a good deal of financial strength. The only ones in my list that I would eliminate from consideration on these measures are:

• Composite Technology and Siemens, because of relatively weak current ratios. I also recently wrote about some other worries I have about Composite.
• CVTech and Siemens because too much debt will constrain their flexibility.
• ABB, MYR, Pike, and Quanta because they are too expensive from the standpoint of price to earnings.

The other financial strength measures are more important for negative earnings companies such as American Superconductor and Composite Technology. Since AMSC appears strong, other valuation measures should be considered to determine if it's overpriced before making a decision to purchase....MORE

"DECLASSIFIED: Nazi Monks Against The Panama Canal"

With the various markets moving less than 1% on the day I think I'll stick with lesser known stories about the Nazis until something interesting comes up.
How's that for a strategic plan?*

It was October 1941 and J. Edgar Hoover had just received a strange bit of war intelligence. A secret German air base was being built in the Amazon. This was particularly worrisome, since such an airfield could be used to launch a secret Luftwaffe attack on the strategic Panama Canal. This idea did not come out of the blue. Americans were at the time very concerned about German influence in South America. To monitor potential fascist agents, the Federal Bureau of Investigation collaborated with a Brazilian agency, the Departamento de Ordem Política e Social (Department of Social and Political Order, Brazil's version of a secret police).

National Archives - College Park, MD Memo from J. Edgar Hoover, raising the alarm on reports about a secret German air base

Then later another piece of evidence was received by US Army intelligence. There were reports that a large amount of fuel was seen sailing up the Beni River, in Bolivia. Gasoline was very much rationed and in short supply during the war, so the the great quantity of canisters flowing by in a river in Bolivia easily called a lot of attention. The ship was sailing towards the Amazon - could the fuel be for the secret air base?

National Archives - College Park, MD Intelligence cable calling attention to fuel being shipped in the Beni River

The issue was investigated. The army played down the rumors, deciding that it was unlikely that so much material could be accumulated there. But alas, a surprise! The suspected culprits behind the secret scheme were ... Nazi monks! According to this report, a group of German monks living in the Amazon were suspected of stockpiling fuel and materials for a secret Luftwaffe base....MORE

Previously:
Shades of Venlo: "Estonian President: One Of Our Counterintelligence Officers Was Abducted And Taken Into Russia At Gunpoint"

*I stole the line from Warren Buffett:

...To earn even 15% annually over the next decade (assuming we continue to follow our present dividend  policy, about which more will be said later in this letter) we would need profits aggregating about $3.9 billion.   

Accomplishing this will require a few big ideas - small ones just won’t do. Charlie Munger, my partner in general management, and I do not have any such ideas at present, but our experience has been that they pop up occasionally. (How’s that for a strategic plan?)...

-Letter to Shareholders, 1984

The next year he did reported:

...You may remember the wildly upbeat message of last year’s report: nothing much was in the works  but our experience had been that something big popped up occasionally. This carefully-crafted corporate strategy paid off in 1985. Later sections of this report discuss (a) our purchase of a major position in Capital Cities/ABC, (b) our acquisition of Scott & Fetzer, (c) our entry into a large, extended term participation in the insurance business of Fireman’s Fund, and (d) our sale of our stock in General Foods.  
Our gain in net worth during the year was $613.6 million, or 48.2%. It is fitting that the visit of Halley’s Comet coincided with this percentage gain: neither will be seen again in my lifetime.....

-Letter to Shareholders, 1985

China Promises It Won't Steal Any Secrets if General Electric Moves Nuke Parts-making to China (GE)

From the Washington Free Beacon:

Knock-off Nukes
GE plans to make nuclear reactor parts in China

Secretary of State Hillary Clinton is supporting a bid by General Electric to export jobs and nuclear technology to China by seeking assurances from Beijing that it will not steal or transfer valuable reactor technology, the Free Beacon has learned.

Clinton’s support for a future deal with GE-Hitachi Nuclear Energy, a Wilmington, N.C., company, to make reactor vessels in China for a nuclear plant it hopes to build in India was disclosed in a cable sent Nov. 21 to the United States Embassy in Beijing.

The cable directs embassy officials to seek Beijing’s assurances that GE-Hitachi nuclear technology would not be transferred to other states or stolen, as outlined under the terms of a 2003 U.S.-China agreement on nuclear technology cooperation.

Disclosure of the Obama administration’s support for GE-Hitachi’s bid to manufacture nuclear goods in China comes as GE’s chairman and CEO, Jeffrey Immelt, continues to head the President’s Council on Jobs and Competitiveness, which advises President Barack Obama on ways to improve the nation’s economy and create jobs.

GE also came under fire last year from Pentagon technology security officials over the company’s joint venture with the state-run Aviation Industry Corp. of China (AVIC) over concerns China would covertly obtain U.S. jet avionics technology that could bolster its growing force of advanced jets....MORE

"A Second Look At The Giant Garbage Pile That Is Online Media, 2014"

From The Dish:

WARNING: This is a post, by a media professional, about the media. If you are a normal human being, you will not and definitely should not care, except inasmuch as it’s part of a debate about whether or not we, the media, are failing you, the normal human being. If you are looking for something a little more general-interest, may I recommend, I dunno, a 10,000-word Grantland post about a prestige cable show. Or make some fantasy football trades. Or read a book, I don’t know!

On Wednesday, I wrote about Takes. My piece was a blog post, written on the fly, based on ideas that have been rattling around in my head for a while. If I’d taken the time – say a week, or a month – to organize those thoughts better, and clarify my argument, I would’ve written a very different – and almost certainly better – piece. But I didn’t do that (I am only guesting here at The Dish for one short week, after all), so I now cheerfully admit that, as my (friendly) critics contend, I conflated a few different Internet tropes. Specifically, in the words of Jack Dickey, I conflated “aggregated picayune garbage with the Take.”

So let’s get into this a bit more. Here are the primary types of garbage content that lots of money – money that could be spent on making good things – is currently being spent on producing:

No-value-added news blogging This is “aggregated picayune garbage,” and it is the primary pollutant in the Great Pacific garbage patch of the Internet. It is just mass-produced debris, utterly valueless, thoughtlessly sent into the world without regard for quality, but solely because it fills the short-term need to have some sort of piece of content on which to sell ads.

This makes up 75 percent* of the content on TIME’s “Newsfeed” (“Chris Pratt Messes Up First Pitch at Cubs Game, Is Completely Charming About It,” “43.5 Socks Removed from Dog’s Stomach During Surgery“), with similar numbers at the Huffington Post, and the newsblogs of AOL and Yahoo and MSN. That’s just the general-interest news media. In other fields, it’s frequently worse, largely because shrinking budgets have decimated everything that isn’t cheap aggregation. Music and pop culture sites in particular are full of semi-identical news nuggets (“Kate Bush’s House in Danger of Falling Into the Sea,” “Kate Bush Is Literally Living Life on the Edge,”, “Kate Bush’s House Might Fall Into the Ocean”), as are sites dedicated to film, comics, and entertainment in general.
*(NB: All percentages and figures in this piece are just made-up, but feel right to me.)

This sort of newsblogging is also, to varying degrees, what makes up much of the Gawker Media* sites’ daily output, even as they’ve strived (successfully) to produce a lot of original material that isn’t aggregation. And to be fair to Gawker Media, they were among the first to do this at all. When they were the only game in town, this sort of newsblogging was an entertaining substitute for reading multiple newspapers, blogs and magazines. Now no one actually reads multiple newspapers, blogs, and magazines, besides the people who aggregate for a living. Everyone else just reads what comes in through their feeds, and all publishers are fighting to post the version of the story that ends up in the most feeds....MUCH MORE

HT: MoneyBeat
So, what is this irony thing you speak of?

"General Electric expects $500 million charge for NY river cleanup" (GE)

The saga of GE's Hudson River pollution scam was one of the reasons we didn't much listen to their "Ecoimagination" pitch.
From Reuters:

General Electric Co expects an after-tax charge of $500 million in the fourth quarter to cover its remaining costs to dredge toxic chemicals it dumped in New York's Hudson River more than three decades ago.

The largest U.S. conglomerate said on Thursday it expected one-time gains, including a favorable tax settlement, to offset the charge and did not change its overall fourth-quarter forecast.

It confirmed that the company now expects its sale of a majority stake in NBC Universal to No. 1 U.S. cable operator Comcast Corp to close in January 2011, rather than this month.

Analysts, on average, expect the world's largest maker of jet engines and electric turbines to report a 14 percent rise in fourth-quarter profit to earn $3.45 billion, or 32 cents per share, according to Thomson Reuters I/B/E/S.
GE shares were down 10 cents at $17.96 in premarket trading.

The U.S. Environmental Protection Agency last week ordered the Fairfield, Connecticut-based GE to dredge deeper into the river to remove sediment that included polychlorinated biphenyls -- or PCBs -- which have been shown to cause cancer.

GE dumped the chemicals, which it had used as an insulator in electric components, into a 40-mile stretch of the river starting outside the capital Albany, some 150 miles north of New York City, for three decades prior to discontinuing their use in 1977....MORE

We have hundreds of posts on the behemoth, here are a few, you can use the blog search box for more:
May 2009
After 25 Years of Stalling, GE Starts Cleaning The Hudson
May 2010 
Eco-imagination: "EPA Cleanup Tactic to Face GE Challenge in D.C. Circuit" (GE)
Dec. 2010 
The browning of General Electric: "Seeking a bigger role in the oil business" (GE)