Algonquin Power & Utilities Corp (AQN.TO)

(A Top Pick May 25/15. Down 14.94%.) *Short* He covered his holdings as the stock rallied. As a utility stock, he would still argue that this is expensive.

This scores very well on his safety & value strategy. It doesn’t have an excessive amount of debt. However, analysts have been revising down their estimates recently, so he would avoid at this time.

Just made an acquisition that looks pretty accretive. He would have no trouble buying this name. They issued a note to fund their latest US transaction, that might get you further ahead in the amount of interest it pays. You are now getting the benefit of US growth, but also with a FX tailwind.

Bought this in the past because he likes the yield, and will most likely be adding it back in again. Good management which has executed well.

Has a great pipeline of growth opportunities, and is in the process of doing a transformational acquisition of Empire District Electric (EDE-N) which is about half renewable and half regulated. Algonquin dipped recently because they did $1 billion raise to pay for this acquisition. He likes the structure.

It is like one of his three Top Picks. They have long term power purchase agreements, a 4.2% secure dividend. Most recent earnings have been increased 16 percent this year, 20% next year. People have confidence in this and other renewable energy companies.

(Market Call Minute.) Doesn’t know this one very well.

This fits into the thesis of being pretty defensive. About 90% of their earnings come from the US. Dividend yield of 4.91% is well covered and is capable of growing. He models a 15% free cash flow growth over the next few years. This is one where you get paid and it is not going to hurt you. In this kind of market, pick your time to step in.

(Trying to be conservative on his Top Picks this time.) This has a growth profile where they really know what they are going to be doing between now and 2020. They have the projects lined up which will allow them to ramp them up, increase their dividends and have cash flow for the next project. Dividend yield of 4.87%.

Quality, stability and cash flow is important. 4.88% yield. They have been busy on the acquisition front in the distribution part of the business.

It is a powerful chart. There is no reason to sell this. This stock has much farther to go.

18% earnings per share growth. Nice dividend growth and a 60% payout ratio.

He likes it on pullback as they have a chance of improving their earnings power. It still has a partnership with EMA-T. Between $9 and $9.50 it is a buy and the yield is attractive.

Did own this, but his stop loss kicked him out. His concern with the whole sector is that a lot of the pension funds in search for yield, have acquired quite a few of these companies. Come the fall, if there is any kind of trouble with the market, they are all going to have to liquidate. Because of that, a systematic risk within the system overwhelms his continuation to holding it for now. This is one that he will add when it gets back on. His company has an $11 target and a sector outperform.

(A Top Pick May 25/15. Up 2.59%.) A SHORT. His view is that utilities are in a very dangerous part of the market cycle. Very high valuations. Also, has high debts. People buy this for yield, but it scores poorly on valuation for him. Trading at 16X EBITDA.