Keep holding your Origin Energy Limited shares for these 3 reasons

Last week’s announcement by the Australian Competition and Consumer Commission (ACCC) that it had instituted proceedings in the Federal Court against Origin Energy Limited (ASX: ORG) is concerning for shareholders but needs to be kept in perspective.

The ACCC is alleging that Origin made “false or misleading representations and engaged in misleading or deceptive conduct.” This is certainly not great and developments will need to be monitored by shareholders however any negative implications are likely to be more short-term in nature with the long-term investment thesis for Origin still intact.

Here are 3 reasons to keep holding your Origin Energy shares –

1)      Origin is the leading integrated energy markets business in Australia and New Zealand, incorporating a diverse fuel portfolio, a diverse generation portfolio and a leading retail customer base. This provides Origin’s shareholders with multiple earnings streams and allows for the steady payment of fully franked dividends.

2)      Origin has positioned itself along with Santos Limited (ASX: STO), Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) as a regionally significant player in natural gas and LNG. Origin’s APLNG Project is on track to deliver first LNG by mid-2015. This will, in management’s words, create a “step change in Origin’s earnings and cash flow.”

3)      Carbon tax or not, voters and governments are increasingly demanding cleaner energy. Origin arguably has some catching up to do compared with peer AGL Energy Ltd (ASX: AGK) and its large portfolio of wind assets however Origin’s growing position in renewables which include geothermal, hydro and wind assets will see is offering in this space improve. 

Companies with strategic assets such as Origin are often subject to significant regulation. This regulatory risk shouldn’t be underestimated and any proceedings should be analysed, as a successful prosecution not only means fines but more importantly it could lead to restrictions which affect future profitability.

If you're investing in energy companies then you really must read this!

Limited oil supply and growing demand mean oil prices are likely to rise over time. Position yourself to profit from this trend now, with The Motley Fool's brand-new FREE research report, "3 Oil Stocks to Send Your Portfolio Gushing Higher".

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.