Some concerns about their gas supply arrangements for a couple of their facilities. Would prefer Northland Power (NPI.UN-T). Power trusts have been the worst performers in the last 10 years.
He moved out of power trusts a few years ago and is starting to move back . Believes this company will have to start cutting distribution. Would avoid it. Recommends picking more stable names like Northland Power, Epcore Power and Inter Pipeline.
Might provide some attractive opportunities here and there. Have 4 generating facilities. The Ottawa one has a gas contract rolling off in a year and it cost them quite a bit to generate electricity. Market believes there will be a distribution cut. If you can get it in the low$7’s and sell it around $8, that is ideal.
Has a number of natural gas coal generated power facilities. He is underweight the power trust sector. Sees risks in the natural gas fired facilities and the margins on these.
Have great assets, but some of them are a little bit out of the money. If you can buy in the $7 range, it’s a Buy. If it goes much above $8, he would be a seller.
Payout ratio is very high, which is a concern. Just announced a partnership on a new power plant. Demand for power is growing. Buy for the dividend, but not for growth.
With its yield of 10.3%, he would hold on to it. Feels they will recover. They fall massacre was a bit of an overreaction. If interest rates are cut, high-yielding interest holdings could have another leg up.
CPX vs. Transalta They're transitioning away from coal to natural gas, wind and solar.They've executed extremely well, but he prefers Transalta for its valuation--and Brookfield could buy Transalta. Both companies are well-run.
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