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.

April 29, 2001

Allegheny Energy, Inc. is a diversified utility holding company that provides electric generation and distribution services in Maryland, Ohio, Pennsylvania, Virginia and West Virginia. The stock has performed well over the past year after hitting a 4-year low of $23.62 on 3/10/00. On Friday, shares of AYE hit an all-time high of $51.30, representing a 117% gain from the low. The stock has posted gains in the last four sessions following its earnings announcement on Monday evening. On Thursday night, the company sold 12.4 million common shares in a stock offering at $48.25 per share, raising $598.3 million in gross proceeds. We believe that AYE could continue to trend higher now that it has cleared the earning announcement and the stock offering. We are also looking for a stock split out of the Annual Meeting on May 10th. The company already has enough shares for a split with 260 million shares outstanding and 123 million shares issued. Going forward, AYE has support at Thursday’s intra-day high of $49.20 with stronger support at $48.17, the 10-dma. Resistance is currently at Friday’s intra-day high of $51.30 and then possibly $53. Traders may consider opening new positions on a bounce off of $49.20 or a breakout above $51.30 on volume greater than 300,000 shares by noon. We plan to place stops at $47 as downside protection.

Picked on April 29th @ $50.60
Change since picked +0.00
Stop Loss @ $47.00

May 3, 2001

Allegheny Energy has been under pressure over the past two days along with the rest of the energy sector. On Tuesday, the company announced that its unregulated generation subsidiary, Allegheny Energy Supply Company, LLC, has completed the purchase of 1,710 megawatts of generating capacity from Enron Corp. (ENE). Shares of AYE traded to an intra-day low of $49.60 on volume of 516,000 shares following the news. Volume has cooled off over the past two days, so the stock may spend some time consolidating in the $49-$52 range. On the positive side, the AYE is having its Annual Meeting on May 10th, and we are looking for a possible split announcement. Going forward, support is the 10-dma at $49.29 with additional support at $48.75, the April 27th intra-day low. Resistance has fallen to the 5-dma at $50.68 and then Wednesday’s intra-day high of $51.20. Traders may consider starting new plays on a bounce off of $49.29 or a move above $51.20 on volume greater than 300,000 shares by noon. We are keeping our stops at $47 to limit potential losses.

Picked on April 29th @ $50.60
Change since picked –0.68
Stop Loss @ $47.00

May 1, 2001

Allegheny Energy opened at an all-time high of $51.75 on Tuesday morning. The stock spent the rest of the day fighting to hold on to the gain. Shares of AYE traded to an intra-day low of $50.55 before bouncing back to close at $51.38 on heavy volume of 893,000 shares. AYE has put in seven consecutive higher lows and volume is trending higher, so the stock could continue to hit new highs as we move closer to AYE’s annual meeting, and potential split announcement, on May 10th. For now, support has moved up to Tuesday’s intra-day low of $50.55 with stronger support at $50.03, the 5-dma. Resistance is Tuesday’s intra-day high of $51.75 and then $53. Look for entry points on a bounce off of $50.55 or a breakout above $51.75 on midday volume of at least 300,000 shares. Our stops remain at $47.

Picked on April 29th @ $50.60
Change since picked +0.78
Stop Loss @ $47.00