I am retired and take educated guesses on all things financial.

December 18, 2008

December 17, 2008: MDU Resources, Barack's Kind Of Company

I have had MDU Resources as a holding in my Permanent Portfolio for a few years. The enterprise can't be pigeonholed as a basic materials company (which has been a prime factor, imo, of its stock price slump). Rather, MDU is a well-managed collection of puzzle parts that should thrive during President Obama's retooling of America scheme, especially within the power and infrastructure areas.

MDU Resources has been expanding its portfolio of useful companies for over eighty years. It started as a utility company serving customers in Montana, where it is headquartered, and the Dakotas. Today, MDU Resources is a member of the S&P MidCap 400 Index. The company operates in three core lines of business: energy, construction materials for infrastructure and utility resources. MDU Resources includes natural gas and oil production, natural gas pipelines and energy services, construction materials and contracting services, and electric and natural gas utilities. Quietly, MDU has operations in almost all fifty states, primarily centered in the upper North Central region. Ever mindful of being politically correct, MDU has issued a slick Resource Sustainability Report that should warm the heart of the most ardent environmentalist.

Keeping with the "green" theme, MDU announced yesterday that they are going to put a large tract of land in North Dakota to use as a prototype wind farm, which will initially produce 19.5 megawatts of energy.

MDU has consistently been overlooked and poorly recognized by the street for the company it has gradually evolved into: an essential player in several key sectors of our economic foundation.

The stock trades at $21.36/share, sporting a 2.90% dividend that is well-supported. MDU has had a 52-week trading range of $15.50-35.34. With a market cap of almost $4b and a modest PE of 9.8, MDU appears to be an attractive choice for investors needing a play on the forthcoming administration's economic emphasis. There is an pronounced upside to this stock for the foreseeable future.

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