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SHARE TIP: National Grid (NG)
June 18, 2009

BULL POINTS:

â–  Upgraded debt rating possible

â–  Predictable revenues and dividends

â–  Premitted returns in US rising

â–  Likely upgrade to UK's power grid

BEAR POINTS:

â–  Rising debt

â–  Rights issue rumour

IC TIP: Buy at 537p

Since National Grid's shares went ex-dividend at the start of the month, their price has dropped 11 per cent and is close to its bear-market low of 511p. Given that National Grid's power transmission and distribution activities are 95 per cent regulated, that their revenues and cash flows are predictable and the group has no exposure to fluctuating power prices, then its financing position is the most likely cause of this weakness.

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