Transalta Corp (TA.TO)

Everything's really working in its favour. Adding long-term duration assets in Colorado. Bought assets below replacement cost, 2-3% accretive. At 8.3x, cheaper than CPX (9.1x). He models 26% discount cashflow per share growth. A belle of the ball. Hard to find good value in energy, but this is one.

He started buying the other day. Sold off on financing done to make Colorado acquisitions. One drawback compared to other utilities is its menial dividend yield of ~1.6%.

With this deal, trying to replicate what a lot of other utilities in Canada have done ( go to the US and make an acquisition). Arguably, more growth in US economy, and with it comes power demand. Very well run.

Concerned that stock trading below issue price of bought deal offering. Utilities have been waffling, as they're interest-rate sensitive. Possibly, enough excitement at this time of AI power demand to reverse stock price. No rush to buy, even for a long-term investor. Watch to see how things settle out with the deal before entering a position.

The whole idea that we're going to see massive demand for energy from data centres ignores the fact that innovation is going to reduce consumption. It's a bit of a mistake to play the AI trade through utilities.

Likes that it bought assets on sale. Hopefully they're good assets, and they might turn out to be very good once gas prices normalize. Time will tell. Sees the move as positive, not negative. Good operator. 

Reason for stock underperformance is that market's just not liking defensive names today -- see that across utilities and consumer staples. It's a side effect of ETF's being forced to buy AI names when they're high, which dampens other sectors.

Yield is 1.5%, quite low, so it means the dividend is relatively secure. Demand for more power, especially in Alberta, means it has a number of projects on the go and footprint will expand. 

Not a bad quasi-utility to have a stake in, but current price may not be best entry point.

Benefits from data centre growth, nation-building themes, natural gas tailwinds from getting offshore. Issues with last quarter, but not material. Trades at a reasonable level of ~17x PE for very sharp EPS growth of 50-60% over next couple of years. 

Lots of data centre upside. Yield is 1.65%

Big electricity-generating utility. Mostly in Alberta, with a presence in US and very small presence in Australia. He's not interested. 

Endeavouring to grow its low yield of ~1.1%. Cut dividend by 78% in 2015, ratcheting upward since. Not profitable on bottom line, which is anomalous for a utility. Fairly highly levered (though that's not unusual). Not investment-grade credit rating.

Power generation, which explains the couple of rips this year on enthusiasm of Alberta data centres. The power demand is real, even if he can't predict which AI companies will be the winners. Alberta has surplus energy and lower regulatory hurdles.

He's not in the binary game of will it happen or won't it. See his Top Picks for a more diversified business.