TRANSCANADA CORP. $45.12 - Toronto symbol TRP

TRANSCANADA CORP. $45.12 (Toronto symbol TRP; Shares outstanding: 705.0 million; Market cap: $31.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines in Canada and the U.S. It also has interests in over 10,800 megawatts of power generation, including the Bruce Power nuclear plant.

In the three months ended September 30, 2012, TransCanada’s evenue rose 4.1%, to $2.1 billion from $2.0 billion a year earlier. Earnings per share fell 15.3%, to $0.50 from $0.59. The decline was mostly due to the shutdown of two reactors, Bruce Power Units 1 and 2, for maintenance. Both have now resumed normal operations.

The company has completed $13 billion of projects since 2010. It now aims to finish a further $10 billion worth by 2015, including not just Keystone XL but also the $2.3-billion Gulf Coast pipeline, which will pump oil from Cushing, Oklahoma, to Houston, Texas, starting next year. TransCanada has another $9 billion of projects planned for after 2015.

TransCanada trades at 21.2 times the $2.13 a share that it should earn this year. That’s a high multiple for a utility stock, but it’s still reasonable in light of the company’s strong growth prospects.

TransCanada is a buy.

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