As we all know, Meridian Energy IPO is well underway. I like investing in power companies such as Contact Energy, Mighty River and now Meridian Energy.
I was once told, buy shares in companies that have monopolistic traits that make money in good times and bad. These companies should be in a sector that have barrier to entry for competitors, and they should also own assets that appreciate with inflation. Guess what, even on a bad day, we all turn on the lights and power consumption continues to increase. You can’t easily build a new power station and existing energy infrastructure has a long life span.
My advice is never to bet the house on one share, however, power company shares are worth buying in a diversified share portfolio.
John