Bennett Marks’ Favorite Stock Is Itron (ITRI)

In an article on Seeking Alpha, Bennett Marks, president and chief investment officer of Marks Group Wealth Management, said that his favorite stock is Itron (NASDAQ: ITRI), the world’s leading provider of “smart meters,” which are two-way communication devices enabling exchange of data between utilities and customers. ITRI is the key component of a major theme in our Energy Technology portfolio. Bennett Marks believes that the smart meter sector is set to see the equivalent of the Internet boom of the '90s. Itron got its early lead in this niche with AMR (automatic meter reading) meters and the company’s latest technology now allows two-way communication meters in what is referred to as the AMI (advanced meter infrastructure) market.

Itron has ample competition, with California-based Echelon (NASDAQ: ELON) posing stiff competition in Europe and other smart-meter manufacturers, such as Sensus, Elster and General Electric (NYSE: GE), acting as worldwide competitors.

Bennett Marks expects billions of dollars in investment in companies developing technologies for the more efficient use of energy and natural resources over the next decade. There will be several winners and losers, and in the end, innovation and technological advancements will yield substantial benefits to the society. Marks believes investors in ITRI will be among the winners in the forthcoming years.

The US government is investing $3.4 billion of stimulus in smart grid technology from 2010 and industry and private capital is pitching in bring the total investment to over $8 billion. Itron seems to be well-positioned to benefit immensely from these stimulus funds.

Although ITRI’s margins have been under pressure due to increased competition, the company may see earnings leverage increase in 2010 and beyond with the help of well controlled operating expenses and a decline in interest expenses. After reducing debt by $397 million last year, the company has $800 million in outstanding debt, with an average interest expense of 5.6%. As of December 31, ITRI had $122 million in cash and several unused credit facilities.

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