Northland Power Inc (NPI.TO)

All utilities had a big selloff when rates were rising in 2022 and 2023. Then, as interest rates went nowhere, so did the stocks, just collecting the dividend. BOC has cut twice, Fed is probably going to start. Utilities have come up off lows, but haven't started to move up yet.

Sector got overvalued, plus interest rates didn't help. Supply shocks caused costs to rise significantly. Leader in offshore wind. Financial commitments seem to be in place. CEO and CFO are out, not sure what's going on. Cash was tight for a while, sold assets to help and to maintain dividend.

Three big projects will significantly increase results, once complete. Probably in holding pattern for a couple of years.

There was a big announcement that Brookfield renewables had a deal with Microsoft to provide a large amount of power and Northland Power, unlike others in the sector, did not see a big rebound. It has some construction risks with three projects under development. However they are all on time and on budget. As they get built the stock should go up.

A number of power companies have been hammered. Better opportunities in telcos and banks, which have also been hit. Those sectors have more stable growth prospects and better secular earnings growth, less dependent on things outside their control.

They'll have a new CEO. It's disappointed for the last 12-18 months, but it's positioned well in wind power and it's bottoming now. He's been gradually adding to this. Investors are awaiting the new CEO and the company's direction. Is concern over their Taiwan operation given geopoilitcal tensions.

Utilities suffered through 2022 because of high debt and high interest rates. Big projects coming online, would help the stock if those can get done on time. Ran up on expectations of renewables taking over fossil fuels, but these things take a long time to work out. Plus, heavily weighted to debt, same as all utilities. 

One of the major players in clean energy. Stock will move sideways for a while until clarity about interest rates. Good opportunity to buy. Utilities can be defensive in a slowing economy. Nice yield of 5.1%.

Tough year 2023. Renewables sentiment turned, interest rates rose, turbine manufacturing problems. Pretty confident they can execute projects well. Long term, renewables aren't going off the map. At these levels, lots of optionality. The riskiest of his 3 Top Picks. He owns a lot and is buying more. Yield is 4.91%.

Unlike other some other utilities names, NPI’s leverage level is a bit better: currently, the net debt/EBITDA is around 5.0x (high but okay with industry averages). Shares have been weak due to a decline in revenue and profitability, which was magnified by a higher interest rates. If revenue recovers, we think NPI could experience decent upside potential. Regardless, lower interest rates should help the shares anyway. Overall, NPI has a cheap valuation (EV/EBITDA is the lowest in years), and has a decent dividend well-covered by cash flow. Analysts do expect a very big earnings recovery this year, and if the company can execute on this the shares will follow. It is not our favourite but does look better after its 31% decline over the past year. 
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They offer a lot of foreign exposure compared to their peers. The valuation has come off a lot in the past year. But he prefers other peers like Altagas. NPI has some issues to work through.

Sold it a while ago, but likes it and its managers especially. Is sensitive to interest rates. He will look at this, the utilities and REITs as interest rates fall. Headwinds that arose in late 2022 have passed. He sold it on concerns of a gap in their development pipeline. He'll look at this again, starting with its debt. Tight management that he expects will do well. Hold on, if you already own.

Renewables have been hit hard the past 6-12 months. Not unique to this stock. Has been buying shares in this company around $25 per share. Share price a good time to buy given weakness. 

NPI has great fundamentals and projects, but has disappointed. Interest rates weighed on these stocks, but there were concerns of developing wind projects off Taiwan given threats from China. These projects take a long time and money to build, so it's for the long haul. Should do better in 2024 as rates will decline. Will hold on.

Caught up in rising rates for labour and materials. Contract prices set years in advance of a project's start date turn out to be insufficient to cover project costs. Her play is BEP.UN, more diversified and more global.

Past 12 months has been tough on shareholders. Cost overruns and rising interest rates hard on bottom line. Not executing on business plan. Better options available for investors in the markets.