Transalta Renewables

RNW-T

This is owned 60% by TransAlta and managed by TransAlta. RNW doesn’t have employees, it pays a management fee to TransAlta instead. The price has gone down over the past year, but so have most utilities, as interest rates have increased. The yield looks safe but there is no clear path for growth. Cash flow projections are flat. They sold 12 million shares in June, but are using the money to pay down debt rather than investing in significant new projects. She expects the price to stay flat, so one could invest in this stock for the yield alone. Alternatively, one could look for a company like this that has more growth projects underway. Yield 7.8%.

Sell and cut losses? Would own it for the dividend. Might want to consider buying more. Primarily a coal utility, but spun off wind assets, which he likes. Unfortunately now, about 41% of their portfolio are Australian nat gas assets. Doesn’t love it, prefers pure play renewable energy stocks. Lots of opportunity here, and not going to be short of cash. Would want clarity on projects and strategic direction moving forward.

It fell with the other utilities but has not bounced back as much as the others. He is neutral on it. He likes its stability and its valuation characteristics but it is not showing good price momentum.. The dividend yield is high, the payout ratio is not excessive and the 15x Price to EBITDA is a little cheaper than its peers, so it wouldn’t take a whole lot of price improvement for him to recommend it. He needs more confidence that disappointed sellers have sold their shares and so will not sell the stock off when it rises more

It is not one of his favorites in the space – he holds Northland Power. Rising interest rates has provided some headwinds for this space in general. Their assets are primarily in Australia and 54% of their assets are in wind generation.

He thinks their assets in the US are minimal. The parent company thought this was too expensive to roll into its portfolio in conversations he had with management recently. This is a real rat’s nest of complexity and he would prefer to not own it.

This holds the majority of TransAlta's (TA-T) power generation assets. It’s a little interest rate sensitive. The renewable area is an area of growing presence. Given the new policies under the Alberta NDP government, renewable assets are probably worth more today than they were before. He would consider this as a Hold to a Buy.

Thinks the problem with the stock is that it is harder and harder to find cheap assets, and it is difficult to build assets, so are challenged on the growth side. Dividend yield of about 7%.

Doesn't see a lot of growth on this. Fairly cheap at 16X, versus its 21X versus its five-year average. 70% payout ratio on 2018 on a free cash flow basis. Probably not a bad value at these levels, but not a lot of growth going forward.

There is a rounded look to the current pattern. Back in 2016 it found a level about $13 and is the ‘Trump Dump’ where it found support. That will continue to be your level of support. It is in a bit of a bearish pattern but if it bounces off the support level it could be good.

Technically, the stock has been rolling over in the last little while, and in fact has established an intermediate downward trend. It is underperforming the market. There is some support at around $12.50, but that implies downside risk of over $1.50. He would be very cautious on this at these levels.

This has multiyear contracted assets, so he feels the dividend is safe. Good company. Dividend yield of 5.7%.

(A Top Pick Feb 24/16. Up 51.06%.) A great business for the renewable side of things. This is going to be a long-term growth business. Selecting your entry point is going to be the most difficult part.