Transalta Corp (TA.TO)

It's been smashed in the past five years, dropping from the mid-teens to around $5-6, and cut their dividend. They made some bad calls when Alberta de-regulated and they let their transmission lines go. But they have turned around. The dividend could rise in coming years and it could move to $12. He prefers Capital Power.

It has not done very well. He also bought some of the preferreds. He thinks they are moving in the right direction. The dividend is pretty secure. They have a long way to go to complete their turnaround. There may be tax loss selling at the end of the year but many have already taken their loss.

There is deep value in this name, owning 60% of TransAlta Renewables – the share value of which equals the market value of TA-T on its own. They own 9% of the Alberta hydro market. The new PPAs on the hydro assets, which act as backup for wind and solar, could help propel this company to a double in the next three years. Yield 2.2%. (Analysts’ price target is $8.25)

Has been a terrible place to be. Long-term decline. It’s destroyed wealth. Market’s trading off of underlying ownership of Transalta Renewables. Pays a small dividend. Washed out, fairly decent value in it.

It has a good dividend. The consolidation this year is actually pretty good, given the utility sector performance as a whole. This is in a good spot to begin to go higher. The quarterly dividend had been cut from $0.29 per share to $0.04, but this is already factored in by the market. Yield 2%.

It is not the same company of 5 years ago. All the headwinds are now tailwinds. They are becoming cash flow positive and paying down debt. It is quite attractive, being a utility. (Analysts’ target: $8.20).

(A Top Pick Sept 15/16. Up 28%.) *Long* (Pairs trade with a Short on TRP-T.) He still has both positions on.

It has had a nice recovery based on the bottom but not when you look at the high of a couple of years ago. They have the renewable side and it used to be worth more than TA-T corp. That imbalance got fixed. They got into trouble on the balance sheet. He would prefer something more stable.

Alberta shut down its coal fired electrical generation plants. Contracts were ended. Australia has some issues for them too. They have cut their costs down and re-focused. There used to be funding issues. They are fine now, but not the best in their sector. He leans more to interpipes. There is clearly not a dividend cut coming. They are not overlevered.

You buy this because of its assets and the ability of those assets to generate cash flow. Feels the Alberta electric generation market is still subject to a lot of question marks. He would rather own wind power in Europe.

This has struggled over the last couple of years as it got hurt by the environmental movement and the NDP government in Alberta wanting to shut down all coal producing energy assets. They are migrating from coal to natural gas and have 2 plants, Sundance 1 and Sundance 2 that are coal fired, which are going to close by the end of this year. That hurts their bottom line. Also, for the last number of years, they have been over levered. Their bond rating has always hovered below investment grade or just barely above it. Thinks it will be in the penalty box for another 6 months to 1 year because they don’t have the greatest of assets.