Transalta Corp (TA.TO)

Looks at this one every quarter because it is cheap, but it doesn’t want to go up. Has some operational problems. If you own, Hold it for the dividend, otherwise just let the stock tell you when to Buy, which is when it starts to improve.

Have been building new plants in Australia. He has been leery about this one because their main business is still Alberta, and Alberta power prices have not been as strong as they were hoping. Prefers other utilities, which have had stronger growth. 5.9% dividend.

This is a utility, and investors should own utilities for the safety of their business and for the yield. However, this one is a very risky utility. Its business model is pretty iffy. Had problems and cut its dividend. You should not own this stock.

There is a feeling that they are having problems with regulatory reviews and there is litigation risk. The Alberta assets are struggling. There is also a risk that their coal plants could get assessed with environmental problems. It is probably going down another 10% before you want to take a hard look at it.

Probably a good entry point at this price. 5.5% yield.

Has looked at this 3 times because it is down so much, there might be an opportunity to Buy. There is a reason this is down. They are having some operational problems, and he is not sure how safe the dividend is. If you are not sure about a dividend on a utility stock, you have to take a very hard look at it. He would leave it for awhile, and let them show you a couple of more quarters of operational success.

It was probably good that they cut their dividend, because it had been acting as a real a drag on the balance sheet growth. The net worth of the company had actually been falling, pretty steadily for 3-4 years. It still is, but is kind of levelling out a little. Stock is cheap but the problem is that we need some earnings. So far the earnings have not changed.

Likes this as a longer-term hold, and feels the dividend is sustainable. Thinks you will see the payout ratio creep down coincident with the company deleveraging their balance sheet. The real “trick shot” for them is going to be the long-term growth potential, when some of their power facilities go from being fully contracted to having merchant power exposure. Longer-term he feels power prices in Western Canada are going to increase. Once they can sell into that merchant market, at prices that are almost twice as high as what they are currently contracted for, they will make money hand over fist. However this doesn’t happen for 4-5 years, so you have to be very patient. Thinks the breakup value is higher than the current stock price.

Thinks the dividend is relatively safe, but the growth aspects do not appear to be that attractive. They have a lot of older equipment/facilities in Alberta, and have some reasonable competition. 5% yield, but you can do better in other situations with more growth.

Cut their dividend to 5.5%. He is not a believer that there is a growth story in this one. Their history on running plants is not great.

Had owned at the $13.40 level and took some profits when it had moved up sharply in January. They then cut the dividend. Very cheap currently. Management has to prove that they can be consistent on the operations side and if they do that, with the incremental cash flow from cutting the dividends, they should be able to grow the cash flow at about 4% per year over the next 3, 4, 5 years. With this valuation you should get decent double digit returns. You’ll have to be patient.

They have a lot of coal fired gas plants that may or may not be coming off line here. This is a big opportunity to make more money because when they renew contracts the coal price will be more favourable for them. They have a lot of debt. You don’t need to own a company like this where you are banking on a turnaround.

It’s okay at the current level. Within the next 5 years it could have potentially 30% upside. It looks attractive, but he would like to see support come in, which it is started to have happen.

Unfortunately it hit the news with a dividend cut and that is never good. It has been a difficult environment to show any kind of growth for this company. There are a lot better places where you could do much better.

As a long-term hold for yield, there are better companies that pay the same yield. You would have thought that an independent power company would be a good preserver of capital, but this has been a destroyer of capital.