Transalta Renewables (RNW.TO) Buy, Sell or Hold

Transalta Renewables (RNW.TO)

12.48

+0.14 (1.13%)

as of Oct 10, 2023, 8:00:00 pm Market Open.

249 watching

DON'T BUY

RNW vs. TA vs. AQN AQN's growth rate is 13%, trading around $17, a discount to the group. At these levels, when not many people are owning it and not expecting much, AQN pays a nice dividend. RNW had turbine problems and pulled back. TA is at a discount to the sum of its parts, as it owns RNW but doesn't get full value in the share price. TA is the better buy for upside.

DON'T BUY

Transalta vs. Transalta Renewables Transalta, becuse it's cheaper, and it owns 40% of TR anyway. They just announced a plan to transition away from coal and gas into wind and power. It trades at 8x EBITDA, whereas TF is 13x.

COMMENT

They're transitioning out of coal. It's a decent income name, though already owns enough utilities like AQN and Fortis.

WEAK BUY

Pretty good quality renewable portfolio. Steady dividend growth, healthy yield of 4.5%. Still upside. Likes it. Trades at a bit of a premium to AY, his preference, which has a more diverse geographic footprint in more ESG-friendly projects.

BUY

One of the names that pop up when looking into tilting the portfolio towards renewables. A solid space in the longer term. A good company and it has seen a nice lift off from lows.

BUY ON WEAKNESS

Last year, it faired very well and Biden also boosted the price. The stocks in the sector have now pulled back. There is a sector change towards traditional cyclicals. The company is a secular growth opportunity with income. There is lots of opportunity for growth. The dividend is competitive and it should grow. Should profit from the ESG trend and multiple expansion.

BUY ON WEAKNESS

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It missed estimates for revenue bt 5% and EPS by 16%. The balance sheet is strong and is showing better growth than expected. Around $17.50, it would be attractive. Though it has now raised dividends since 2017, it is acceptable with good growth. Unlock Premium - Try 5i Free

BUY

RNW vs. INE RNW depends on drop-down from the parent for growth. Whereas INE is an independent power producer. At current valuations, he prefers RNW. Pretty good visibility over the next few years. INE is more expensive and has good prospects, but its valuation doesn't have as much upside.

WAIT

Not one of the best in the space, but the whole group has seen a rise. Assets in Australia, which is a favourable jurisdiction. Wait for last night's election results to calm down before taking a position.

DON'T BUY

The renewable sector with increased values on social and environmental considerations, has done very well. He sees that you can get better returns elsewhere in the markets. He prefers more traditional pipeline and infrastructure companies. We should see some stabilization in oil and nat gas prices.

HOLD

His model price is $21.20, or a 25% upside. They are paying a 94% payout ratio. This will pay out all the income through to Dec '21. He would wait for a positive transit before buying. It is at the top of the zone. At the $13/14 level he would be a buyer and would even still hold it here.

COMMENT

She likes renewables. Nothing wrong with RNW, though other names are more liquid. This will grow if the parent company drops down more renewable assets to it. The dividend is safe. She owns other names in this sector because they're more liquid.

DON'T BUY

Doesn't follow this one much, and he prefers the renewables like Boralex, Algonquin and Innergex. RNW has some challenges, but the CEO is investing more in renewable power. Not at the top of his list in this sector. The worst is behind RNW after a rough few years.

DON'T BUY

It is a great company. They are better positioned now. It is about a 5% yield increasing at high single digits. It is an asset drop down model and he prefers companies that develop assets from the ground up.

COMMENT

Spin out from TransAlta with a lot of their wind assets and some thermal generation from Australia, which from a sustainable perspective is not so great. Not a pure play green energy company. Nicely diversified company that has a very nice stable cashflow and dividends.

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Transalta Renewables (RNW.TO)