Two High-quality Utility Trust Buys

Article Excerpt

TRANSALTA CORP. $24 (Toronto symbol TA; SI Rating: Average) operates 49 power plants in Canada, the United States, Mexico and Australia. In the three months ended December 31, 2005, TransAlta’s revenues rose 22.7%, to $810.1 million from $660.1 million. Ongoing earnings rose 56.5%, to $58.2 million or $0.29 a share, from $37.2 million or $0.19 a share, mainly due to the increased revenues from higher power prices. Cash flow rose 35.8% in the latest quarter, to $204.8 million or $1.03 a share, from $150.8 million or $0.78 a share. TransAlta trades at 25.3 times the $0.95 a share it made in 2005. That’s high for a utility. But the higher power rates should let TransAlta maintain its $1.00 dividend, which yields 4.2%. In the past few years, TransAlta has spent heavily building new plants and upgrading existing ones. This capital spending should pay off with fewer maintenance shutdowns in the next few years. That will let the company take advantage of rising power prices…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.