Capital Power (CPX.TO)

He likes this. The Alberta power market is coming back. Had a lot of dislocation in Alberta over the past several years, because it built too much capacity. They went down and then moved to a lot of renewables. Shut down the big Sundance power plant. Thinks power prices in Alberta will come back, so this should come back. The short-term weakness is probably just market rotation. Should be a great investment long-term. Dividend yield of 7%+.

Just won a 20 year project n Alberta for a wind project. Some of their assets are being transitioned from coal. He is studying this company because the electricity market in this province will become more robust as coal is taken off line. He is doing more work in it. Electricity prices in the province may recover as they shut down coal.

Has a nice fat dividend of 6.9%. Within the Alberta market there is a major shut down. The big Sundance coal power plants have been shut down. Coal pricing in Alberta has been depressed. He is optimistic that higher price will come back in Alberta, and this company is well positioned to benefit from that.

It is a good entry point. Their legacy business was coal powered generation. They are transforming these plants to natural gas and collecting a termination payment from the province. The yield is close to 7% and the dividend has grown steadily. The strategy is sound and the entry point looks good.

Northland Power (NPI-T) or Capital Power (CPX-T)? This one has a little more non-sustainable stuff in it. As the outlook for that has improved, it has done better lately. He would classify both as in the Hold category, and a little bit lower on the pecking order. (Owns some of the preferreds.)

In the top 10% of his database. Just acquired some new assets and it will be interesting to see how that will impact earnings. The 6.2% yield is significant, but they have significant free cash flow to support it.

They have been in the news recently. They have a lot of coal burning legacy plants. Alberta has regulated coal power out of existence by 2030. There is concerned over stranded assets. The government came to terms with them. There is concern about how this company is going to reinvent themselves. Carbon pricing is coming in Canada. There is too much uncertainty.

The big issue has been the Alberta government and their decision to stop allowing production of power from coal. When that decision was made, this company was hurt the most, which was ironic, because they had the newest coal plant. The big question is; how much is the Alberta government going to compensate them for stranding those assets. There are probably safer dividend paying stocks.

This is one where you are betting on what happens with their coal assets, and whether or not they are successful against the government. 190% payout ratio. He won’t buy this name right now because it is trading at 37X 2016 PE. Dividend yield of 7.5%.

Whenever he looks at an investment, he wants to know if he likes the macro of the sector, the financials of the business, and the technicals. On this one, the technicals are starting to turn around. The financials are okay. The macro is what he is worried about. Anybody producing power in Alberta right now that isn’t clean, he doesn’t know what is going to happen in the future. If they have any contracts with the government, they are all rolling off in the future. He would rather be invested in a clean power producer.

The yield is safe. It is a wait and see, with their coal assets.

Alberta power prices are pretty terrible. This is a good way to play exposure to Alberta power utilities. Their coal powered plants present uncertainty to the market.

Unless there is an extreme overshoot by the market, he has an NAV of $17-$18. They could be compensated by the Alberta government for BV destruction. The dividend is high. He models 49% payout ratio, so it looks pretty safe. The company is guiding to a 7% annual growth.

(Market Call Minute.) Produces electricity in Alberta using coal. The NDP government does not want any more coal, so this is not a place you want to be.

His company has it with a $27 target and as a sector perform. Feels the 6.3% dividend yield is sustainable.