Smoother Sailing for Suez?

What's the appeal of Paris conglomerate Suez (SZE )? Although conglomerates have all but lost their luster on the Street, investment outfit Franklin Mutual Advisers has accumulated 1 million shares. "It is a conglomerate with valuable assets worldwide, trading at a big discount to its true worth," says Franklin's Timothy Rankin. Suez is a global supplier of water-related services, gas and electricity, and waste management. Its Big Board shares have been pummeled from 34 a year ago to 17--given the soggy U.S. economy and market slump, and heavy exposure in Latin America.

Suez has been selling noncore assets and plans to complete such sales by 2004. The assets for sale are worth $8 billion to $10 billion, says CEO Gerard Mestrallet. On a sum-of-the-parts valuation, Suez is worth as much as 37 a share, analysts figure. Analyst Raimundo Fernandez-Cuestas of UBS Warburg (UBS ) in Paris rates the stock a strong buy and figures Suez will earn 92 cents in 2002 and $1.30 in 2003. He says Suez offers "very substantial upside in the longer term."

By Gene G. Marcial

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