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Veolia Down 17% In 5 Days, Potential Long Term Buying Opportunity

12 June 2008 3 Comments

It has been a rough week for Veolia Environment (VE). The stock, along with many European stocks, has been hit hard, down over 17% since last Friday. As I mentioned in my post about building a water position, VE and other water stocks are a potential long term play that has my interest.

As you can see in the below chart, VE has tanked in recent days. Time to buy or stay away?

The stock received a beating after two analysts downgraded the stock warning that the company might miss earnings estimates for this year. For the long term investor who believes that water companies are poised for growth in years to come, this provides a fantastic buying opportunity.

If you are a believer in the long term trend of water supply becoming a more crucial and public issue, then you shouldn’t be worried about near term earnings misses. In fact, you should welcome the downgrade because oftentimes, stock prices overreact to warnings providing a nice buying opportunity.

If you decide to invest in the stock, there could be more short term ugliness. However, it is critical to remain focused several years out. I have liked the stock in the past, and am now even more interested in building a position. Hopefully the nice dividend yield will help cushion any short term downturns.

Please consider this article as merely a notice of a potential buying opportunity. Do your own research before buying the stock.

Author’s Disclosure: I do not hold a position in the stock at this time, but may in the near future.

3 Comments »

  • myrna said:

    This stock is a loser..there must be a problem with the management for it to have fallen so far this year.

  • chris said:

    Do you think the dividend is safe?