The company's operating income is split down the middle into two divisions... power generation and distribution.  ENI has transmission assets that go beyond Chile... this is why it's a Latin American proxy... to Argentina, Brazil, Columbia and Peru. 

I like ENI as much as CPFL Energia S.A. (CPL), the Brazilian stock I recommended back on April 3rd, for a quick 6.3% gain...  This one hasn't paid any dividends since I got behind it, but it's a 7.6% yield.  I tell you, that's a great stock still...

But, this vehicle... my Chilean vehicle... has, frankly, much better growth than CPL...

Now, ENI does its power generation business through a wholly-owned subsidiary called Endesa Chile, which is the largest private sector generation company... not just in Chile, but in all of Latin America.  Even better, the company generates cheap, environmentally-friendly power, as two-thirds of what they produce comes from hydroelectric facilities...

Now, we like hydro... not as much as natural gas... remember, 2008 is the year of natural gas...  and not as much as wind, which I thought was 2009, but now I've been mentioning it so many times, I'm thinking it might be 2008 too.   But, you know what?  Hydropower is cheap.  It's just not convenient if you're in the desert.

Now, in terms of the power generation market, a stable expansion like the one in Chile, that they've been experiencing for years, leads to an automatic growth in power consumption and demand for power.

For the past six years, ENI's distribution subsidiary has seen demand rise by an average of 5% annually, roughly in line with Chilean GDP growth.  A lot of people say, well, how do I play the middle classification of India, or China, or Brazil, or Russia?...  Well, the first thing you have to think of, is that the first thing they do with their (newfound) money is not go to Burger King, okay...  they get power, so they can have appliances... 

This is the play on that...

Now, get this... low rainfall and the scarcity of natural gas in Chile, has recently created the threat of a power crisis for some of the less-regional players. ENI, on the other hand, is going to be fine. It could be the only healthy utility in a land of really scarce energy. I like the sound of that.

Political problems in Argentina and Bolivia have led to scarce natural gas supplies. They've forced Chilean utilities to switch to higher-price fuel oil and diesel... Again, terrific for ENI, as it gets two-thirds of its power from hydroelectric dams...

Lower water levels have led to less total volumes for ENI, but they've also created higher spreads (in pricing)... Again, that's how ENI makes its big margins and big money... they've got to pay to generate power. What it gets from the consumer, which is always good for business, is going to be much, much more.

Natural gas shortages that I was talking about... again, a positive catalyst for ENI... by spurring support for this company's politically-charged hydroelectric projects that they have on the drawing board. This is Chile's version of energy independence, the way that Brazil did it with sugar-based ethanol... It's being freed from Argentinean and Bolivian natural gas.

ENI has a big investment plan, aimed at satisfying the growing demand for power in the region... they're going to spend $5 billion in new generation projects through 2021, along with roughly $900 million per year to maintain and grow its extensive distribution network... So what I'm seeing here, is a multi-year move. This is not a trade... this is a multi-year move in ENI.

What else has ENI got going for it?...

A regulatory structure of the markets, operations vastly improved as countries have adopted a transparent, market-based structure... I would never recommend a foreign stock, if it didn't look like an American stock... The regulators also allow for improved efficiencies to benefit shareholders, rather than customers... I told you, Chile is very pro-capital... so there's more of an incentive to be efficient and profitable... much better than in this country.

The stock, at $17 smackers, with a yield at 2.1%... 19x consensus earnings estimate... That is a discount to the global utility average, and the low side to its historical range... so I think it's wrong.