Allan Meyer Transalta Renewables RNW-T COMMENT Apr 01, 2016

Power company that was spun out from TransAlta.
Results not great lately.
$12 share price a fair price.
Would prefer parent company (TransAlta). 

Not a great stock.
Charts suggesting a bad time to buy.
Waiting to see if shares stop falling.

However its cash-available-for-distribution outlook was down 9.5%. Shares immediately plunged 15% from $14.35, and have more or less hovered around $12 this year. Sure, RNW pays a 7.88% dividend, but at a nosebleed 335.7% payout ratio. Maybe a nimble trader can jump in and out of this and gain a few dollars, but all others should avoid. Read Budget winners for our full analysis. 

A yield company, and they've all been hurt by interest rate increases. Looked like it had really good growth until December, when growth impetus shifted to the parent, TA. Good 7.5% dividend, especially if rates don't go up as much. Quite cheap at 15x, still decent growth rate. More value in TA, but RNW is still good.

All renewables took off on hype, but then collapsed. The renewable business will continue to grow. Remember that, while renewables are important to the energy complex, they're not yet economically efficient. For example, when there's no wind, you need backup. Right time to buy.

Disappointing. TA is taking it private at $13 per share. A good thing, as RNW was paying out all free cashflow in dividends. If you like the company as a whole, there's an option to accept cash plus shares. He'd exit, take the money and run.

RNW is a yield proxy, and those have fallen, with decent yield and nice EPS growth. Parent company is taking it over, pending approval. The real question is what do you do with TA? Transaction looks slightly dilutive. Long term, bigger flow in a simplified structure, which could lead to a higher valuation. 

Backdrop for TA is really supportive, solid balance sheet, compelling free cashflow yield of 15%. Could be synergies. He likes TA post-closing.

The takeover deal will go through. Nothing left in the stock. You wouldn't buy it to make a tiny, minimal percentage.

Recently bought by TransAlta parent. Growth and dividend play. Will continue to own shares in parent (TransAlta).