Transalta Corp (TA.TO)

Hasn't liked this company because they have such poor assets. Doesn't understand why they didn't cut their dividend. He prefers others.

Just about everybody that is going to sell this, probably already has. Have recently been plagued by lower Alberta prices and uncertainties surrounding costs of environmental regulations that might be brought. Bottom fishing is very hard to do with stocks because you almost always overshoot. He sees the NAV at $15 a share. He models a 69% 2015 estimated payout ratio. 6.5% dividend is safe. Trades at a 2015 estimated free cash yield of 9.6%. If you can hold your nose, this is one that you can incrementally Buy.

No one likes burning coal very much. They were propped up by the dividend which they were not earning. He would stay away from it.

Downward trend, below 20 day moving average and below the market. There is no compelling reason to own it except for the yield. Usually these do well in the summer. It is not good that it did not.

The basic trend is down over the last 3 years. We keep taking out the lows.

People own utility stocks because they are safe and defensive. This one is the opposite. It is a troubled utility stock where the dividend has been cut and may get so again. The balance sheet is not good and may get downgraded by ratings agencies.

He is really looking for companies that have accelerated earnings growth and this company hasn’t had that for some time. What you would have to look at is whether the dividend will be secure. The last thing you want to see is for them to be cutting their dividend. They have got rid of some of their nonproducing assets. If he owned, he would probably continue to Hold after he had done some more work on whether the dividend would be safe.

Had recommended this because it had looked so cheap, but a little while ago, he finally decided to throw in the towel. Their problem is that they have been paying out more than they have been earning. The balance sheet has been slowly slipping. If there is going to be a brighter tomorrow, the analysts who are following the company, are not reflecting it in their earnings forecasts.

Hit lows last week going back to 2000. They have a new director from ARC Energy. Having cut the dividend they are executing well in terms of operational efficiency and new projects. It is selling at the cheapest cash flow multiple in 25 years.

Just hit a new low today. Missed 7 of their last 8 quarterly earnings estimates. He tends not to purchase stocks with that type of pattern and that are trading well below the 200 day moving average, with lower lows and lower highs. Stock is down 8% and its peer group is up 25%.

(Market Call Minute.) A serial under-performer. This is an industry that is booming, and they are having a difficult time.

Doesn’t see a lot of growth. They cut their dividend. If you want to own a dividend paying stock, there are other areas in the market that have more attractive cash flow and attractive earnings growth.

There is a decent yield on the stock, but he doesn’t think it is going up any time soon. Feels there are better places to put your money in the utility field. (See Top Picks.)

Reduced their dividend, so it is much more sustainable at these levels. One issue is that they are really tied to the Alberta power market, and prices have been fairly volatile. The renewable energy business is really heavily weighted to wind as opposed to other areas. They have assets that require a lot of capital expenditures, which is one of the issues he has for this company. If you can Buy at these levels, you are fine. There are other areas that are much more beneficial.

Does not love the company but likes the relative valuation. This space certainly has some negative headwinds. It is in an area where you generally want to own it. You are at the low end of the range going back 10 years. He does not give it a whole lot of downside from here. But he may cut the position if it does not rebound in the net number of months.