Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

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Springbok
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by Springbok »

Subby wrote:
Shakespeare wrote:globeadvisor.com: With utility yields, small can be beautiful
All equity investments carry some risk. Changes in interest rates, electricity prices and the costs of commodities used in power generation could all affect CU's bottom line. But for investors seeking a reasonably priced stock that will almost certainly throw off growing income, the company is worth a close look.
(I have a position in my TFSA.)
Thanks for sharing. Yes, same here. Looking to add more and benefit from the ongoing focus on dividend increases over the next few years. Here's hoping that we don't have an abrupt bout of interest rate increases.
I read that yesterday and having some money in my RRIF looking for a conservative home, I had a look at CU. Div yield is only 2.67% but if Heinzl is right that might not matter in a registered account where total yield could be more important. On the other hand, with such a small div yield, it doesn't take much of a price drop to move into negative territory.

I went to BMOIL. Their Value Analyzer (under Quotes+) suggested that the stock is overvalued and that a return of -15% should be expected. On another tab (Research) the current analyst ratings indicate it will perform well and that 12 month target price should be in mid 70s. These views seem to conflict.

If anyone else is on BMOIL, the new Quotes+ format is quite interesting. I don't know how long it has been that way - just first time I have looked at it.

PS: Price seems to have retracted after a strong opening - Presumably G&M affect wearing off :)
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by mpav »

Okay I am a big time holder of CU, and love the stock.

BUT- it has always been cheap relative to peers...stocks like enbridge are trading 20X. CU relative to its history is actually expensive. It has normally been in the low teens PE.

I am still buying through my DRIP, but what we are seeing is a normal discount to its peers, with the utility universe seeing expanding PE's over the last few years.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by retireat50 »

Could the lower multiple be due to the fact that the Southern family essentially controls the direction of the company? Typically that would cause such a discount. In addition I think CU in the past has just plundered along with slow and steady growth. This should change over the next 5 years what with the boom in Alberta. They have substantial CapX over the next few years, but once done the dividend growth should be explosive. FWIW I'm a buyer at these levels.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by BRIAN5000 »

CALGARY, ALBERTA--(Marketwire - Feb 21, 2013) - Canadian Utilities Limited (CU.TO)(TSX:CU.X) announced today that it intends to split its Class A non-voting shares and Class B common shares on a two-for-one basis by way of a share dividend in 2013.

Atco as well.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by Shakespeare »

Canadian Utilities Limited Announces Two-For-One Share Split - Yahoo! Finance
The record date will be June 13, 2013 and the payment date will be June 14, 2013. Ex-distribution trading in the shares on a split-adjusted basis will commence on June 17, 2013.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by BRIAN5000 »

News Flash (yes I'm kidding)
In usual trading Atco fell steeply today a whole 26 cents.
end

Seems to be a little week of late broke $46 this morning. I've got a go have a look at it price of $46.75 but it's come a long way since 2009 :cry:
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by scomac »

I've been picking away at ATCO lately. It screens well. It's not cheap in absolute or historical terms, but based on the growth they've been able to generate over the last few years it seems like a reasonable deal to me. There's not much that is today; invariably, I've been a day late and a dollar short with pretty much everything I've been following.

It just goes to show you how hard it can be to gain an entry point. You can follow something for months or years and then miss the move on something that at the time appeared to be within the normal trading range. That's why I keep CCL.B on my watchlist; it's a reminder of how a 6 bagger comes about, more or less right out of the blue.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by brad911 »

scomac wrote:I've been picking away at ATCO lately.
Same. Very well run company and I would call it reasonable too on a number of metrics. Actually surprised its been down to this level in this type of market, but likely investors are moving into other sectors?
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by AltaRed »

I picked up some CU earlier this year at circa $35.8X and wished I'd bought a full position. Continuing to watch....and watch....and watch.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by retireat50 »

I think the main issue holding all utilities back at this point would be the upcoming rising interest rate environment. It's hard to ignore what will be a multi year rise in rates and the invariable negative impact on utilities
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by bpither »

Nothing holding back EMERA ... they announced a 6.9% divvy increase after hours on the 26th with "promises" of 6% per annum over the next 5 years. Yielding 4.39% and it's up 4.5% over the past 5 days.

Regardless of interest rate hikes which may cause initial excitement I believe they will be insignificant due to debt default concerns. There is still a hunger for income, and a forward guidance of 5 yearly 6% dividend gains isn't too shabby in this market.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by chufinora »

Does anyone know why CU was down over 5% today when the Canadian market was up 2%. I would have thought the lower interest rate news would favour the utilities? I looked but could not find any news on ATCO or CU. It has been reaching all time highs recently but it seems unusual timing for a pullback (And an un-characteristically large daily movement for this stock)
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by BRIAN5000 »

IIRC CU seems to have a negative correlation to the market for some reason.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by ig17 »

BMO analyst downgraded CU today. To... gasp... Market Perform. That must be the reason for the 5% drop. Rational utility maximizing agents efficiently processed newly available information. 8)
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by AltaRed »

As a proud owner of CU, I suggest less growth in Alberta and thus less growth in CU's gas business.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by CROCKD »

I have been thinking of adding a utility to my dividend stocks. Ones such as CU and FTS appear overvalued. I got my fingers burned with the only other utility I have owned Transalta.

I have been looking at ALA and ACO.X both of which are rated undervalued. ALA pays a yield of 3.93% at current price and a ROR estimate of 30% (BMOIL Value Analyzer).
I presume as both of these are operating in the O&G economy they are affected by the current environment.

Another alternative for dividends might be ZUT an equal weight utilities ETF.

Anyone have any thoughts on any of this?
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by ockham »

I've had a position in CU since Dec 01. Since then, price up 245%, a div increase every year now totaling 150%, including 10% this December. Most boring stock, both in name and performance, I've ever owned. Having long regretted not owning more, and hoping for more of the same, I opened a position in parent ACO.X in November, which I filled out in February. A 15% div increase was announced in December.

I am not a stock picker. I do not do deep analysis. The only CU metric I've ever paid attention to is its dividend. Past performance is not a guarantee of future returns.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by nisser »

These two are now below their 5 year P/E average . Other than the Alberta factor, is there anything out there that would screw up their outlook for the future? I didn't look in detail but I don't like the debt that ATco has piled on.

Debt to cash flow ratio went to 4.2 from 2.5 in last 5 years. Is that going to realize itself into a substantial increase in operating cash flow?
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by AltaRed »

Atco/CU is on an expansion program, so I dare say yes.... the debt will translate into increases in operating cash flow. If nothing else, the Southern family is known for its attention to its family business and I've not seen or heard of any directional change in business model. Control has pretty much been transferred from Ron over the past 10 years to the new generation without waves or ripples.

Still, I have hesitations over the AB economy going forward and its western businesses will face headwinds for awhile. LNG might help that, but LNG is still a fantasy (Christy Clark's optimism aside).

Disclosure: Full positions

P.S. I think ALA is still overvalued at current levels given its P/E multiple and total exposure to AB and the LNG fairy tale. Much of its growth potential has to stall by 2016. BMO IL's Value Analyzer results is overly influenced by historical results which have been stellar. Still, I have it on my Watch List at a lower level.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by Subby »

Quite the soft quarter from both Canadian Utilities and Atco.
Lower earnings compared to the third quarter of 2014 were mainly the result of a regulatory decision recorded in the third quarter of 2014. Lower comparable results were also due to the impact of the GCOC regulatory decision received earlier in 2015, forgone earnings as a result of the sale of the Company's information technology and services business in the third quarter of 2014 and lower profit margins and project activity in ATCO Structures & Logistics.
http://www.canadianutilities.com/NewsRe ... id=1995350

Both stocks have taken a substantial hit over the past few days.

Considering adding to my position in CU based on valuation.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by ockham »

Subby wrote:
Considering adding to my position in CU based on valuation.
And I'm considering harvesting a loss with my position in ACO.X (getting close to 20% down) :(
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by AltaRed »

Slightly (single digit) underwater here on both. Current weakness is likely due to the headwinds of persistently soft O&G prices with no end in sight and probable damage coming from the NDP gov't tabling a record deficit and possible downgrade of AB's credit rating in the not too distant future. That said, we may have seen the worst and both companies have strong balance sheets. Will continue to hold full positions in both stocks.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by kirkwood »

Atco bumps up its dividend another 15% and still the share price continues to dribble downwards to another 52 week low. It took a dive in July when earnings expectations weren't met and the trend hasn't been broken. Is this just investors' view of things going slowly in Alberta or is there something else going on? I noticed that Margaret and Nancy Southern bought a sizeable load of shares a month or so ago.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by AltaRed »

I haven't looked at their business in any detail recently but will speculate it is investor sentiment that Atco's non-power business continues to suffer. One might speculate the start of construction of any LNG project and/or Kinder Morgan would provide support for this stock, but we know LNG is dead for the indefinite future and there is some uncertainty about Kinder Morgan's expansion. The big oil sands expansions are done and the PPL/IPL petrochemical projects are a year or two away. Keystone XL and/or Line 3, when they go, will provide some support but not a major, long lasting one (one construction season for Canadian portions).

So my guess... is investors are tired of waiting. I suspect the Southerns know it is only a matter of time and they can afford to wait. I got tired of waiting and bailed, and will only re-visit if there is some catalyst to change the trend. At this point I believe it is a 'show me' value stock.

P.S. I remain invested in CU. Owning one part of the Southern business is probably good enough anyway.
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Re: Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)

Post by thedude99 »

Record earnings and down she goes. Complete disaster for awhile here. Stagnant share price since about 2012 despite dropping rate environment for 90% of the time since then. Time for a management shakeup although not possible due to Southern family control. What are they doing for shareholders here???
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