Electricity Fuels TransCanada’s Gains

Article Excerpt

TRANSCANADA CORP. $34 (Toronto symbol TRP; SI Rating: Above average) gets most of its revenue from its gas pipeline systems, but most of its earnings growth in the past few years has come from the 23 electric power plants that it either owns or controls. In fact, TransCanada’s power operations supplied just 32% of its revenue in 2005, but 55% of its income. Thanks to strong gains at both of its main divisions, TransCanada’s profits from continuing operations in the three months ended December 31, 2005 rose 26.3%, to $0.48 a share from $0.38 a year earlier. The most recent quarterly earnings figure excludes a $0.24 a share gain on the sale of an asset. Revenue rose 20.0%, to $1.8 billion from $1.5 billion. One of TransCanada’s most profitable investments in the past few years is its 31.6% stake in four units of Ontario’s Bruce nuclear plant. This single investment accounted for 51% of the power division’s profits in 2005, up from…

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