Opinions
Lyle Stein
Northland Power Inc
NPI-T
PAST TOP PICK
Sep 26, 2017
Stock price when the opinion was issued
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Stock's done well since May, as it completed its main Oneida battery plant in the Niagara region -- ahead of schedule and under budget. Cashflow can be used to make the balance sheet more attractive. Stock will be rewarded. Looks very stable going forward.
Likes it quite a bit for its 2 other projects on the go, which are expected to be completed in next couple of years. One in Poland, one in Thailand. Companies with a niche will do well, so he's not too worried about the non-green rhetoric coming from the US.
The chart for AQN tells the story for the sector.
Seeing signs of improvement. Both AQN and NPI have moved above 200-day (40-week) moving average, a positive. Especially so because a lot more quant funds are moving $$ in the markets, and one of the triggers they look at is whether or not it's above that technical level. It it's above, they can buy it; if not, either they can't buy it or they short it. Likes the regulated utilities -- FTS, H, EMA, CU, CPX.
If he were less cautious, he'd be more bullish. Not a big fan. More of a value play. Technically, they've been laggards. Better places to put your $$.
Lack of wind does seem to be an ongoing issue. Bigger picture attracts him. Finished Oneida battery storage project in Ontario ahead of time and under budget (they are really good builders of projects). Two other projects ongoing -- Taiwan is on time and on budget, Poland is also seeing turbines installed. Lots of cashflow once projects come on. Prefers this new management team with respect to deploying cashflow.
Stock's down today. Better pick today than before the earnings call ;) Yield is 5.6%, while you wait for very achievable catalysts over next 2-3 years.
Had 3 large projects on the go. One is now complete, under budget and early. Other 2 are on time and on budget. Great history on execution, leaving lots of buffers on projects.
As projects near completion dates, projects get de-risked, stock price goes up. Starting to see that now, but still early enough to get in. Once those remaining projects get completed, cashflows should increase 45% by 2027. Yield is 5.42%.
Have 2 major projects that they just or will bring online. Offshore wind is their biggest market. Are generating free cash flow and have a slate of projects coming on. The bigger risks come in building these projects, so the risk is gone once the projects are built. They will generate more cash flow and already have a good balance sheet. Renewables are out of favour because of Trump, but he sees potential.
(A Top Pick Nov 30/16. Up 11%.) He still likes this. They are in the electric generation business. A year ago, they were just finishing up the first project. Now they’ve finished the construction of the last turbine, and it should be in full operation by the end of this year. For the next 10-15 years, they’ll just be spinning cash. Thinks they’ll raise the distribution in 2018. A well-run company.