As investment plays, not all electric utilities lack zing. Some of them are compelling because of hidden assets. That's how some investors view Carolina Power & Light (CPL), a Big Board-listed company that supplies power to 1.2 million customers in the Carolinas.
But its one asset that has yet to be reflected in CPL's stock value is Interpath Communications, CPL's telecom unit that provides Internet services. It owns a 2,000-mile fiber-optic network covering much of the South. "In many areas, it is the backbone of Internet traffic," says Sven Mondberg, a special-situations analyst at Starr Securities, who thinks the stock is undervalued. The system generated $78 million in 1999 revenues from leasing fiber-optic capacity to other carriers. Interpath also offers services as an applications supplier and Net service provider.
Mondberg says CPL may spin off Interpath to unlock its value. Based on the valuation of other fiber-optic networks, Interpath is worth $1.5 billion, or $10 a share in CPL stock, says Mondberg. Despite the market's recent tumble, CPL has been on the rise, from 28 in March to 33 5/16 on Apr. 5. Analyst Kit Konolige of Morgan Stanley, who rates CPL a buy, sees earnings of $3 this year and $3.60 in 2001.