Growing negatives make TransAlta a hold

Article Excerpt

TRANSALTA CORP. $22 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 220.3 million; Market cap: $4.8 billion; Price-to-sales: ratio: 1.7; Dividend yield: 5.3%; TSINetwork Rating: Average; operates over 85 unregulated power plants in Canada, the U.S. and Australia. Ottawa recently announced plans to phase out coal-fired power plants by around 2025. That would hurt TransAlta, which uses coal to generate 55% of its power. Under the proposals, TransAlta would have to close its coal-fired plants when they reach 45 years of age or when their power-purchase contracts with provincial electricity regulators expire, whichever is later. The new rules would prevent TransAlta from extending the lives of these plants unless it can lower their carbon emissions to the same level as natural-gas-fired plants. TransAlta feels it can replace some of its older plants with gas-fired facilities. It is also developing new clean-coal and carbon-storage systems that would help it comply with the new standards. But this technology is…

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