Stockchase Opinions

The Monthly Gems by Allan Tong Transalta Corp TA-T TOP PICK May 05, 2025

Long a favourite of Stockchase Michael O'Reilly, this Alberta renewable energy company sank over 2% during April's tariff-induced slide. The sell-off helped to halve TA's PE of 40x from last September, and is now trading far lower than the industry's 33x. Even better, is the confident forward PE of 33.57x. Other qualities: a low beta of 0.55 and low payout ratio of 40% to support the 2.12% dividend yield. True, that yield lags its peers by 150 basis points or more, but TransAlta's ROE is 25.3%, towering over the sector's 8.97%. Anchored by strong free cash flows, the company is aggressively buying back shares as institutional shareholders own 67% of this stock. Lower interest rates are a tailwind for the entire sector

$12.610

Stock price when the opinion was issued

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DON'T BUY

Has been rallying the last 3-4 months based on rate cuts. Has exposure to the Alberta power market which has seen prices under pressure since 2022. Prefers Capital Power.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jul 18/24, Up 21.8%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with TA is progressing well.  To remain disciplined, we recommend trailing up the stop (from $8.50) to $11.00 at this time.  

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jul 18/24, Up 30.9%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with TA has achieved its target at $13.  To remain disciplined, we recommend covering half the position at this time and trailing up the stop (from $11) to $12.  

DON'T BUY

It has been up and down for a decade and its ten year chart shows a price not much higher than 10 years ago. He is not expecting much dividend growth. He prefers TC Energy which is more solid and more diversified.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jul 18/24, Up 51.7%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with TA is progressing well.  To remain disciplined, we recommend trailing up the stop (from $12.00) to $13.50 at this time.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jul 18/24, Up 109.3%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with TA is progressing well.  To remain disciplined, we recommend trailing up the stop (from $13.50) to $16.00 at this time.  

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jul 18/24, Up 59.6%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with TA has triggered its stop at $16.  To remain disciplined, we recommend covering the position at this time.  Combined with our previous guidance, this will result in a net investment gain of 46%.

WATCH

He's looking at it. It's softened up considerably. Decent dividend payer, cut a few years ago but now back on track. High-quality company with share price having sold off. An opportunity, but he hasn't pulled the trigger yet.

Spike on chart due to strong earnings and a bunch of analysts giving it a "Buy". Got ahead of itself. Disappointment recently. He doesn't like buying at all-time highs, where there's often more downside than upside.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly

TA holds a basket of high-quality power generation facilities including renewables.  The company is prudently using some cash reserves to aggressively retire debt and buy back shares.  It trades at 21x earnings and supports a 25% ROE.  We recommend setting a stop-loss at $9.50, looking to achieve $16.00 -- upside potential of 28%.  Yield 1.9%

(Analysts’ price target is $18.33)