Acquisitions work for Fortis

Article Excerpt

Thanks to a series of strategic acquisitions, Fortis’s assets have jumped from $4.6 billion in 2005 to $28.0 billion today. Expanding by acquisition is usually riskier than internal growth. That’s because new businesses often come with unexpected problems and costs that can offset the extra revenue and earnings they bring. Fortis cuts this risk by targeting established regulated utilities with predictable cash flows. The company plans to keep buying utilities that can benefit from its expertise, especially as today’s low interest rates cut its borrowing costs. At the same time, it’s investing in its current facilities, which will further spur its earnings growth. FORTIS INC. $36 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 277.5 million; Market cap: $10.0 billion; Price-to-sales ratio: 1.7; Dividend yield 3.8%; TSINetwork Rating: Above Average; began supplying electricity to St. John’s, Newfoundland, in 1885. The company is now the main power utility in Newfoundland and PEI. In the past decade,…

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