atco
p>ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $76 and ACO.Y [class II voting] $76; Income Portfolio, Utilities sector; Shares outstanding: 57.6 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.7%-owned Canadian Utilities (see page 103). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction companies and energy exploration firms; Canadian Utilities owns the remaining 24.5%. In the three months ended June 30, 2012, ATCO’s revenue rose 11.9% to $987 million from $882 million a year earlier. That’s because its structures division won a number of new contracts, and it recently purchased a gas-distribution business in Australia. Earnings rose 21.3%, to $74 million, or $1.28 a share, from $61 million, or $1.07.
Companies like ATCO sometimes trade for less than the value of their assets. Investors call this a “holding company discount.” That’s why you can buy a share of ATCO for $76 and get roughly $79 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses, which provide a third of its earnings, for free.
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Companies like ATCO sometimes trade for less than the value of their assets. Investors call this a “holding company discount.” That’s why you can buy a share of ATCO for $76 and get roughly $79 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses, which provide a third of its earnings, for free.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $67 and CU.X [class B voting] $67; Income Portfolio, Utilities sector; Shares outstanding: 127.6 million; Market cap: $8.5 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see page 104) owns 52.7% of the company.
Canadian Utilities continues to benefit from last year’s $1.1-billion purchase of a company that distributes natural gas in Perth, Australia. That helped offset lower revenues from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 5.6% in the second quarter of 2012, to $95 million, or $0.74 a share. The new Australian business added $16 million to that total. A year earlier, Canadian Utilities earned $90 million, or $0.70 a share. Revenue rose 6.0%, to $706 million from $666 million.
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Canadian Utilities continues to benefit from last year’s $1.1-billion purchase of a company that distributes natural gas in Perth, Australia. That helped offset lower revenues from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 5.6% in the second quarter of 2012, to $95 million, or $0.74 a share. The new Australian business added $16 million to that total. A year earlier, Canadian Utilities earned $90 million, or $0.70 a share. Revenue rose 6.0%, to $706 million from $666 million.
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These five electric utilities are using their strong cash flows to make acquisitions and invest in new projects. These moves will enhance their long-term prospects and give them more cash for dividends. However, not all are buys right now. TRANSCANADA CORP. $44 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $31.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.transcanada.com) is mainly known for its natural gas and oil pipelines. However, the company continues to expand its electrical-power business. TransCanada’s 19 power plants in Canada and the U.S. now supply 30% of its revenue. The company has agreed to build a new gas-fired power plant near Napanee, Ontario, as part of a deal with the Ontario Power Authority (OPA), which regulates the province’s power producers. This new plant will replace a plant that TransCanada previously agreed to build in Oakville, Ontario....
ATCO LTD. $74 (www.atco.com) earned $73 million, or $1.28 a share, in the three months ended June 30, 2012. That’s up 19.7% from $61 million, or $1.07 a share, a year earlier. The company reported strong earnings at its structures business, which builds temporary shelters for resource-exploration firms, and its natural gas distribution operations in Australia....
ATCO LTD. $74 (www.atco.com) earned $73 million, or $1.28 a share, in the three months ended June 30, 2012. That’s up 19.7% from $61 million, or $1.07 a share, a year earlier. The company reported strong earnings at its structures business, which builds temporary shelters for resource-exploration firms, and its natural gas distribution operations in Australia....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $74 and ACO.Y [class II voting] $74; Income Portfolio, Utilities sector; Shares outstanding: 57.7 million; Market cap: $4.3 billion; Priceto- sales ratio: 1.1; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.7%-owned Canadian Utilities (see left). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction companies and energy exploration firms; Canadian Utilities owns the remaining 24.5%.
In the three months ended March 31, 2012, ATCO’s revenue rose 9.1% to $1.1 billion from $1.0 billion a year earlier. That’s mainly because new contracts pushed up revenue at the structures division by 32.2%. Earnings rose 10.0%, to $121 million from $110 million. Earnings per share rose 10.6%, to $2.09 from $1.89, on fewer shares outstanding.
Based on current prices, you can buy a share of ATCO for $74 and get roughly $83 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses for free.
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In the three months ended March 31, 2012, ATCO’s revenue rose 9.1% to $1.1 billion from $1.0 billion a year earlier. That’s mainly because new contracts pushed up revenue at the structures division by 32.2%. Earnings rose 10.0%, to $121 million from $110 million. Earnings per share rose 10.6%, to $2.09 from $1.89, on fewer shares outstanding.
Based on current prices, you can buy a share of ATCO for $74 and get roughly $83 worth of Canadian Utilities. That means you get ATCO’s non-utility businesses for free.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $72 and CU.X [class B voting] $72; Income Portfolio, Utilities sector; Shares outstanding: 127.6 million; Market cap: $9.2 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 19 power plants in Canada, Australia and the U.K. ATCO Ltd. (see below) owns 52.7% of the company.
In July 2011, Canadian Utilities paid $1.1 billion for a company that distributes natural gas in Perth, Australia. This purchase helped push up revenue by 3.5% in the first quarter of 2012, to $837 million from $809 million a year earlier. Earnings rose 9.7%, to $193 million from $176 million. Because it had more shares outstanding, its earnings per share rose at a slower pace of 8.3%, to $1.44 from $1.33.
Canadian Utilities will probably earn $4.06 a share in 2012. The stock trades at 17.7 times that estimate. The company has raised its dividend every year since 1972. The current rate of $1.77 a share yields 2.5%.
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In July 2011, Canadian Utilities paid $1.1 billion for a company that distributes natural gas in Perth, Australia. This purchase helped push up revenue by 3.5% in the first quarter of 2012, to $837 million from $809 million a year earlier. Earnings rose 9.7%, to $193 million from $176 million. Because it had more shares outstanding, its earnings per share rose at a slower pace of 8.3%, to $1.44 from $1.33.
Canadian Utilities will probably earn $4.06 a share in 2012. The stock trades at 17.7 times that estimate. The company has raised its dividend every year since 1972. The current rate of $1.77 a share yields 2.5%.
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These two utilities offer an attractive combination of growth and income. Investors who are looking for stronger growth should choose ATCO, while income seekers should opt for Canadian Utilities. CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $72 and CU.X [class B voting] $72; Income Portfolio, Utilities sector; Shares outstanding: 127.6 million; Market cap: $9.2 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 19 power plants in Canada, Australia and the U.K. ATCO Ltd. (see below) owns 52.7% of the company. In July 2011, Canadian Utilities paid $1.1 billion for a company that distributes natural gas in Perth, Australia. This purchase helped push up revenue by 3.5% in the first quarter of 2012, to $837 million from $809 million a year earlier. Earnings rose 9.7%, to $193 million from $176 million. Because it had more shares outstanding, its earnings per share rose at a slower pace of 8.3%, to $1.44 from $1.33....
CANADIAN PACIFIC RAILWAY LTD., $75.67, Toronto symbol CP, is starting to benefit from its recent efficiency improvements. As well, more of its trains are running on time, thanks to the warmer-than-usual winter. In the three months ended March 31, 2012, CP’s average train speed rose 27% from a year earlier. It also had 28% more railcars in service, and terminal dwell (the time to load and unload railcars) fell 27%. As a result, CP now believes that it earned $0.80 to $0.83 a share in the quarter. That’s a lot better than the consensus estimate of $0.65 a share....
CANADIAN PACIFIC RAILWAY LTD., $75.25, Toronto symbol CP, continues to expand its rail network in the Bakken area, which could contain more than 500 billion barrels of oil. This region covers parts of Montana, North Dakota and Saskatchewan. Oil was first discovered at Bakken in 1951, but it has always been hard to extract from the shale rock. However, modern techniques, such as horizontal (or slant) drilling, have made this oil much easier to access. Texas-based U.S. Development Group LLC is currently building a new hub in North Dakota to handle Bakken’s rising production. This hub, which should begin operating in mid-2012, will transfer oil from trucks to trains, which will then ship it to market....