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AES Corporation (NYSE: AES), the emerging-market power generation company, has had a tough few months, declining from $24 to $20.50 -- a big decline for a company with steady and large cash flow generation.The stock's weakness began when its multi-year earnings guidance was a little lower than expected. Another reason for investor nervousness is that in the last liquidity crisis, from 2000 thru 2002, the stock got crushed as the company suffered from a seriously leveraged balance sheet with concerns about bankruptcy being high.
However, this time around, the company has considerably less debt and generates considerably more cash flow. Also, emerging markets around the world have an even greater understanding that they must place an emphasis on power generation if they want their economies to improve.
Having dropped 15% during the past month, it may be time to consider bottom fishing in AES. The stock has been trading nicely between $20 and $24.
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