Duke Energy's stock doesn't shine as bright as its future.

• Author: Williams, C.C.
• Position: Brief Article - Statistical Data Included

Charlotte-based Duke Energy Corp. (DUK--NYSE) is one of the world's largest energy companies, loaded with close to $30 billion in assets. It serves 2 million customers in the Carolinas and is seen as a leader in the slowly deregulating national energy market. But Duke's stock hasn't been generating as much juice on Wall Sheet as it used to. At around in early February. Duke stock was 24% off its two-year high of $70.69.

During 1999, it dropped 21.9% and underperformed even the low-voltage Dow Jones Utilities Average of 15 electrical utilities, which fell 9.3%. Part of the reason was that Duke surged higher than other utilities in late 1998 -- when the market dropped and investors fled to safe-but-boring stocks such as utilities -- so Duke had farther to fall. Also, some analysts reportedly thought the company paid too much in July for a stake in Brazilian power generator Companhia de Geracao de Energia Eletrica Paranapanema.

But utilities, in general, have drooped like power lines in an ice storm. Fear of rising interest rates has hurt. Most utilities are highly leveraged, capital-intensive companies that need to borrow money to expand. Also, in a bull market where stocks of money-losing tech companies can triple in a few days, a slow-and-steady image doesn't turn on as many investors.

As if all that weren't enough, energy deregulation has made investors skittish. Twenty-three states have passed laws deregulating their electricity markets. North Carolina could follow suit later this year. Energy companies are buying and selling assets to gear up for competition. During the last few years, Duke has been trying to transform itself from a sleepy utility into a fast-growing energy generator, distributor and marketer. In 1997, it jumped into the natural-gas market and became a national player with its $9.8 billion purchase of Houston-based PanEnergy Corp., a gas pipeline and storage company.

Within the past year, Duke has significantly expanded operations in the Americas and Australia. Since July, it has announced the purchases of electric companies in Brazil and El Salvador, a gas pipeline in Tennessee and gas-gathering and -processing facilities in Oklahoma; the building of...