Northland Power Inc

NPI-T

He really likes them. It has a really nice dividend. They own some natural gas so it is like co-generation. If you want 100% renewables, then this would not fit the bill. But if you want companies going in the right direction, then this is one of them. They are developing new technologies. At the end of the day they will own assets in wind generation in the north sea. They are well positioned in the sector.

Valuation is pretty reasonable. It trades 10.5 times EBITA. Payout ratio of 80%. He will continue to hold it. Yield 5%

It has been good over the last year. He is not in this sector. His only caveat is the debt on the balance sheet. There is nothing else wrong with it.

The CEO did a stock disposition recently. One of his largest holdings. A leader in off-shore wind energy. Their issue has always been attracting capital. They need to partner or be owned by a pension fund, which they almost did a few years ago. It's odd the CEO founder sold his shares recently as opposed to a few years ago when the stock price was nearly the same. That sale has created an overhang, though. It's been in the $25 range in the past 3-4 years while NPI has de-risked and built up several projects. The future looks good, so what's next for them? Maybe raise the dividend; they haven't done that, because they've been hoarding capital to build projects. He's adding to it as it pays over a 5% yield, and he predicts the stock will rise.

He owns more of AQN. The companies in this space are pricey, because investors are moving away from fossil fuels and buying these renewables. Yes, these stocks can get pricey, so don't buy at the top and buy more than one like AQN or BLX, which are better than NPI.

NPI vs. AQN NPI is fine, but she prefers AQN. Nothing wrong with NPI. NPI's recently pullback was due to the CEO dumping a lot of stock on the market, which was a buying opportunity/entry point. AQN has a regulated side in renewable side, pays a good dividend and can growth outside Canada.

Has watched it. Owns the competitors in the space. Overhang on the stock. Good dividend, good assets. Well managed. Likes the sector. Not a bad investment at this point if you want to get into the space.

Today, the chairman did a secondary offering of $750 million at $23.35/share. The stock dropped 9.5% today. Should I be worried or will this be accretive? Because the chairman is doing the offering, the company is not getting the proceeds, so this is the worst kind of seconday offering, because it's going to him--the Chairman. So, you got to absorb $750 million that is going to estate planning. It's fine; the chairman has a right to do it, but the market has to absorb $750 million in the market. It got absorbed today--barely. That's why the stock is soft. Eventually, the offering will get absorbed and that's fine.

It has been interesting with a lot of these renewable power utilities. They bounce back a lot better than the rest of the market. He only owns this kind of quality for the dividend. His only concern is that it is part of a historically high price. They are very, very clean in term of energy. (Analysts’ price target is $26.42)

A good start to the year. They have brought on 3 wind projects and one in the North Sea. They have a 20 year agreement in Taiwan. He does not expect a dividend increase this year. They are trying to finance growth internally. His largest holding. Yield 4.86% (Analysts’ price target is $26.42)

A renewal energy company with a $4 billion market cap. A dividend payout ratio of 58%. Forecast earnings growth of 40% is expected. They have created free cash flow of $325 million. A PE of 15.5, which drops to 10.5 in 2020 and higher earnings growth. Yield 5.3%. (Analysts’ price target is $25.73)

AQN vs. NPI He likes and owns them both. They offer steady cash flow. Likes their dividends which should continue for quite a while. The downside to these and other utilities is that pension funds own them. So if there's a downturn, these will come down in price from a sell-off.

(A Top Pick Jan 04/18, Up 3%) They had a good 2018. Pays a solid 5% dividend and has good development projects in Taiwan and Korea. They brought on their big projects in Europe on time and on budget. They're now producing, so there's good cash flow to increase dividends and reinvest in the company. The end game could be as a tuck-in business for a larger infrastructure provider.

He is looking at it. The dividend is a little low. But they have some wind farms coming online in the North Sea and this should move the needle. It is a good solid company to own at this stage.