AYE is the utility holding company for Monongahela Power Co., The Potomac Edison Co., West Penn Power Co., Allegheny Generating Co. and others. For the FY ended 12/31/00, revenues rose 43% to $4.01B. Net income before extra. item rose 10% to $313.7M. Results reflect the acquisition of the assets of West Virginia Power and increased number of customers, partially offset by higher interest expenses due to increased LT debt outstanding.

February 22, 2001

Allegheny Energy Incorporated (AYE) provides its customers with electric generation and electric/natural gas delivery. The company also invests in and develops telecommunications and energy-related projects. Investing in utility companies generally requires a lot of patience, as profits are slowly accumulated over time. However, it seems this rule doesn’t apply to AYE shares, which have more than doubled over the last year. What’s more, we also like AYE as a split candidate. Currently, the company has 110.44 million shares outstanding and 260 million authorized, enough for a 2:1 stock split. Presently, shares have advanced nearly 20% over the last few weeks and could be gearing up for a break out rally. So, looking forward, we’ll look for initial resistance to arise at the all time high of $48.65. Advances through resistance, when combined with good volume of 670,000 shares or better will present us with our first potential entry point. Further opportunities will come when AYE shares advance through the $50 mark. As for support, we expect the $47 mark to be firm, bolstered by the 5-dma of $47.05. We’ll set our stops at $45.94.

Picked on February 22nd @ $48.22
Change since picked 0.00
Stop Loss @ $45.94

March 15, 2001

We were expecting that Lehman Brothers “buy” rating on AYE would reverse recent weakness in the stock and encourage some buyers to jump in. The news, however, did not produce the scenario we were anticipating, as a sharp gap lower at the open stopped us out at $45.80. This weakness was likely due to Wednesday’s sell-off in the NYSE Utility Index (NNA), which posted a 3% loss on the day. With that said, we say good-bye to AYE.

Picked on February 22nd @ $48.22
Profit/Loss = -2.72 (-6%) (Stopped Wednesday @ $45.80)
Best Profit = +0.78 (+2%)

March 13, 2001

We we thought that a recent "buy" rating from a Lehman Brothers would turn the recent tide of selling in AYE , but it just wasn't so. Instead, AYE shares continued to tread lower on the day, losing $0.60 to close at $46.13. Still, this late in the day announcement may gather some buying interest in tomorrow's trading. Furthermore, the intra-day chart suggests that a surplus of buyers are picking up shares just above the $46 mark. So, should a reversal from current levels unfold, we’ll look for initial resistance to now crop up at the 10-dma of $47.12, trailed by a tougher challenge at the $48 mark. Recent highs near $48 will also put forth resistance. As far as entry points are concerned, we’ll look for AYE shares to move through these points, when volume of 250,000 shares is traded by midday. Continue to hold firm stops at $45.94.

Picked on February 22nd @ $48.22
Change since picked –2.09
Stop Loss @ $45.94

March 11, 2001

Aside from an established presence in energy production, Allegheny is seeking additional opportunities for growth in the lucrative telecommunications market. Through its Ventures division, AYE will leverage its existing fiber optic network by marketing telecom services to major carriers and retail customers. This doesn’t sound like your average utility company, which is exactly what has attracted so much attention to the stock. Looking at the chart, shares continued to gain ground. On Friday the stock closed the session up $0.02 to $47.52. Volume improved over previous days to 562,900 shares, which we feel is a good sign that buyers may be re-entering the stock. The technical indicators also point to higher levels, with the MACD bottoming out after the recent decline, and the stochastic continuing a bullish crossover. So, to that end, we’ll look for further gains in the upcoming week to face resistance at the all time high of $49 and then at the $50 mark. Support comes in at the converging 10 and 20-dma’s of $47.41 and $47.18, respectively. Traders might want to consider initiating a position if the stock can bounce off support or move through resistance at $49 on volume of 300,000 shares traded by noon. To keep our downside risk in tact, we’ll keep stops firm at $45.94.

Picked on February 22nd @ $48.22
Change since picked –0.70
Stop Loss @ $45.94