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Centrica is one of the best at what it does …but that doesn’t make it a buy

I have made and and I have lost money in Centrica (CNA) shares over the last twenty-five odd years.  I guess - helped by the dividend flow - I am probably ahead over time, but it has only been a bit more interesting than keeping money in your bank (and let’s not even talk about the reality of underlying inflation over time for this).  Unlike over thirty of its peers in the gas/electricity industry, it is highly unlikely to ever go bust though as at least it hedges its purchasing (and the benefit of being ‘British Gas’ for ever, is that you have seen almost all the possible historical challenges out there). 


Centrica has the potential to recover following the disposal of Direct Energy and a shift of focus back to its core business - buy

Buying shares in a large company which seems to be going through a rocky patch is always a risk, as in some cases these companies never actually manage to recover, but if you do get it right it can be very lucrative and Covid appears to have helped to create some good opportunities. Energy provider, Centrica (CNA) has performed terribly over the past six or seven years and anybody who has held it as a long term investment during that period of time will be sat on a sizeable loss. Even prior to the arrival of Covid it was already in a downwards spiral with high levels of debt and falling profitability, but the virus accelerated that and even though the markets and many energy shares have recovered to some degree in recent months, Centrica is still trading closer to the lows with a share price of 44.8p...


Centrica: Back to the Future – boring is good!

Centrica (CNA) updated the market this morning with its half-year report…..and the proposed sale of its US unit, Direct Energy for $3.6 billion. With the sale process of Spirit Energy still to be restarted once commodity and financial markets have settled and the eventual divestment of its nuclear business still to come, Chris Bailey reckons it looks like this is a trip back to the future as the company returns to its mid-80s look as a regulated UK business. Here, here.

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