MDU Resources: Obama's Kind of Company

I have had MDU Resources (MDU) as a holding in my Permanent Portfolio for a few years. The enterprise can't be pigeonholed as a basic materials company (which has been a prime factor, imo, of its stock price slump). Rather, MDU is a well-managed collection of puzzle parts that should thrive during President Obama's retooling of America, especially within the power and infrastructure areas.

MDU Resources has been expanding its portfolio of useful companies for over eighty years. It started as a utility company serving customers in Montana, where it is headquartered, and the Dakotas. Today, MDU Resources is a member of the S&P MidCap 400 Index. The company operates in three core lines of business: energy, construction materials for infrastructure and utility resources.

MDU Resources includes natural gas and oil production, natural gas pipelines and energy services, construction materials and contracting services, and electric and natural gas utilities. Quietly, MDU has operations in almost all fifty states, primarily centered in the upper North Central region. Ever mindful of being politically correct, MDU has issued a slick Resource Sustainability Report that should warm the heart of the most ardent environmentalist.

Keeping with the "green" theme, MDU announced on Tuesday that they are going to put a large tract of land in North Dakota to use as a prototype wind farm, which will initially produce 19.5 megawatts of energy.

MDU has consistently been overlooked and poorly recognized by the street for the company it has gradually evolved into: an essential player in several key sectors of our economic foundation.

The stock trades at $21.36/share, sporting a 2.90% dividend that is well-supported. MDU has had a 52-week trading range of $15.50-35.34. With a market cap of almost $4b and a modest PE of 9.8, MDU appears to be an attractive choice for investors needing a play on the forthcoming administration's economic emphasis. There is an pronounced upside to this stock for the foreseeable future.

Full Disclosure: The author holds a position in this company.

Comments

[GregT:]

Very good points made. Wall Street cannot easily categorize MDU so they ignore it to a great extent. Most importantly, MDU has great management.

2008 Dec 18 08:12 AM

[Mark Divy:]

I have never understood how the Street's "smart" folks have never looked beyond the name for this stock. Funniest example was Cramer type casting this stock as a basic utility and not liking it, while at the same time puching natrual gas.....

Good to know what you are looking at rather than just looking at the name.

2008 Dec 18 08:22 AM

[User 322223:]

I believe MDU is headquartered in Bismarck, North Dakota.

2008 Dec 18 02:09 PM

[Thomas Smic...:]

You are correct. My error.

On Dec 18 02:09 PM User 322223 wrote:

> I believe MDU is headquartered in Bismarck, North Dakota.
>

2008 Dec 18 06:24 PM

[granger:]

great info, solid holding from first glance, thanks for the idea

2008 Dec 21 03:00 AM

[RWCMom:]

I like MDU because the executives are modestly paid. One of the directors is a nun indicating both care for the environment and moderate fiscal policy. Not a grand dividend but a slowly increasing one.

Jan 27 12:19 PM

[tdinoly:]

I was given 5 shares when I graduated HS. it's now at 80... thru dividend re-investment.. this is a good company to go long on!

Jan 30 12:45 PM