TransCanada (Symbol-TRP)

Discuss your favourite picks, broker, and trading or investment style.
Post Reply
User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

TransCanada (Symbol-TRP)

Post by yielder » 17 May 2005 11:45

Raising cash while getting rid of a slow no growth asset. Acquisition in the works??

No market reaction.

banker1
Newcomer
Newcomer
Posts: 6
Joined: 04 Apr 2005 22:30

Post by banker1 » 17 May 2005 22:48

Is this stock, in your opinion, a good buy now (long term)? Seems like a good company, but I am worried commodities will drop for a while and this will affect companies stock price. Opinions?

User avatar
scomac
Gold Ring
Gold Ring
Posts: 5918
Joined: 19 Feb 2005 09:47
Location: The Greenbelt

Re: TRP - TransCanada

Post by scomac » 18 May 2005 08:16

Yielder wrote:Raising cash while getting rid of a slow no growth asset. Acquisition in the works??
How about raising cash for funding Alaskan pipeline JV with Enbridge. :idea:

Scott
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Re: TRP - TransCanada

Post by yielder » 18 May 2005 11:26

scomac wrote:How about raising cash for funding Alaskan pipeline JV with Enbridge. :idea: Scott
I don't think so. That's got a long way to go before serious money gets spent. They could pay down debt but it wouldn't make more than a 5% dent in their LT debt. And they already have an A rating.

Given stated management objectives, I wouldn't be surprised to see a power generation acquisition in California, Oregon, or Washington.

I'd love to see them get their act together on Bruce Power. The restarts of have not been smooth. I'd expect them to learn from their mistakes.

Mike

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder » 18 May 2005 11:42

Is this stock, in your opinion, a good buy now (long term)?
Depends on why you want to own it. If you're comfortable with the current yield of 4% and don't care about price fluctuations, then maybe. If you do care about price fluctuations and want to maximize your yield, then it's not cheap at 4% and a PE of 14.9. Over the past ten years, TRP has had an average yield range between 4.1% and 5.3% and a PE range between 11.7 and 14.0, excluding extremes.

Remember that rising rates will affect a company like TRP, in both its operations and its share price.

Mike

Disclosure: I have a full weight in TRP

banker1
Newcomer
Newcomer
Posts: 6
Joined: 04 Apr 2005 22:30

Post by banker1 » 26 May 2005 22:24

Thanks for the reply Mike. I take it that when you refer to yields you are referring to dividends. Also when you say TRP wil be affected by rising rates, you mean interest rates. I just want to make sure I understand your reply. Thanks again.

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder » 27 May 2005 10:54

banker1 wrote:I take it that when you refer to yields you are referring to dividends.


In this case, yes.
Also when you say TRP wil be affected by rising rates, you mean interest rates.


Yes.

User avatar
angelocardoc
Silver Ring
Silver Ring
Posts: 108
Joined: 04 Apr 2005 00:13

Post by angelocardoc » 30 May 2005 11:13

Hi

On May 17th TRP decides to sell 30% of it's limited partnership
TPL_u.TO

TransAlta decided to dump it's stake in it's limited partnership too TPW_U.TO

Why are big corporations converting some of their assets to Limited Partnerships and then selling them off?

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder » 30 May 2005 11:23

angelocardoc wrote:Why are big corporations converting some of their assets to Limited Partnerships and then selling them off?
They're monetizing slow growth assets to give them cash to invest in higher growth assets. TRP, TA, & ENB have all done this. TRP is building a business that flows Arctic natural gas to California. TA has moved from regulated to non-regulated business but hasn't been able to stabilize or grow its earnings. ENB is growing its oil pipeline network to benefit from growing oil sands production.

Monetizing slow growth assets means they don't have to go to the capital markets or touch current cash flow to fund new business. Management time and effort is freed up for new business. All around it's a smart move.

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20721
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Post by Shakespeare » 30 May 2005 13:27

monetizing slow growth assets
A single power plant is actually a declining-value asset as the plants have a finite lifetime. You can only get growth in the power-plant business if you can build or purchase new plants to replace the worn-out ones.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

User avatar
Springbok
Gold Ring
Gold Ring
Posts: 5049
Joined: 22 Mar 2005 16:47

Post by Springbok » 30 May 2005 13:38

Shakespeare wrote:
monetizing slow growth assets
A single power plant is actually a declining-value asset as the plants have a finite lifetime. You can only get growth in the power-plant business if you can build or purchase new plants to replace the worn-out ones.
Power plants do have a finite life, but so do all plants in all industries. In fact, Power plants have a very long life compared with most other industries and depreciation allowances allow for replacement or upgrading over time.

Maybe I missed your point?

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20721
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Post by Shakespeare » 30 May 2005 13:54

Maybe I missed your point?
The point is that a utility company holds back enough cash for new plants but a trust might or might not: the financials would have to be examined. I suspect that in at least some cases, the trust does not allow for plant replacement.
so do all plants in all industries
And trusts based on single plants (say pulp plants) also might not be viable when the plant is no longer competitive.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

User avatar
angelocardoc
Silver Ring
Silver Ring
Posts: 108
Joined: 04 Apr 2005 00:13

Post by angelocardoc » 30 May 2005 14:09

So the company gets rid of dying or un-sustainable assets by selling them to investors.

Now the question is, how do I know when to get out?
I've done well with trusts that I've bought.

User avatar
Arby
Gold Ring
Gold Ring
Posts: 2358
Joined: 20 Feb 2005 19:23
Location: Ottawa, ON

Post by Arby » 30 May 2005 15:22

angelocardoc wrote: TransAlta decided to dump it's stake in it's limited partnership too TPW_U.TO
I don't recall seeing anything about TransAlta selling it's stake in TPW.un. Do you have a reference?

With regard to TransCanada selling their stake in TPL.un, it should be noted that they sold to another strong utility company, EPCOR, with experience in developing and managing power plants. Presumably EPCOR likes the idea of owning the TPL.un assets. EPCOR management has said that it intends to grow the LP. As Yielder mentioned, TPL.un apparently didn't align with TransCanada's new strategy of growing their pipeline business, but TPL.un seems to align well with EPCOR's future stratetgy.

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder » 30 May 2005 21:46

angelocardoc wrote:So the company gets rid of dying or un-sustainable assets by selling them to investors.
I didn't say that. I said slow/no growth assets. They're probably able to sell them at more than they're worth based on the yield they're able to offer.
Now the question is, how do I know when to get out?
Can't help you with that one. :lol: It's an individual decision.

User avatar
angelocardoc
Silver Ring
Silver Ring
Posts: 108
Joined: 04 Apr 2005 00:13

Post by angelocardoc » 31 May 2005 01:01

That link about TA selling TPW_u.to

http://makeashorterlink.com/?J3D023C2B

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Re: TRP - TransCanada

Post by yielder » 20 Jun 2005 09:42

Yielder wrote:Raising cash while getting rid of a slow no growth asset. Acquisition in the works??

No market reaction.
Didn't take long. Fairly small though. More to come?

User avatar
Arby
Gold Ring
Gold Ring
Posts: 2358
Joined: 20 Feb 2005 19:23
Location: Ottawa, ON

Post by Arby » 20 Jun 2005 11:38

angelocardoc wrote:That link about TA selling TPW_u.to
http://makeashorterlink.com/?J3D023C2B
TA previously had ownership interest in TPW.un through two different methods: direct ownership of about 10% of TPW.un shares; and a 50% ownership of TA Cogen which is the operating company that owns and runs the power plants for TPW.un. The news releases indicates that TA sold the TPW.un shares that it owned directly, but TA still owns a 50% controlling interest in TA Cogen, so TA still has a significant financial linkages with TPW.un.

User avatar
yielder
Gold Ring
Gold Ring
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder » 29 Jun 2005 12:30


User avatar
arthur
Gold Ring
Gold Ring
Posts: 4620
Joined: 19 Feb 2005 13:10
Location: The Town of the Blue Mountains

Post by arthur » 02 Nov 2005 19:05

I have made very good money on this and due to the uncertainty of costs associated with Bruce Nuclear I have sold. out my position.
You want the truth, you want the truth, you can't handle the truth.

The masses have never thirsted for the truth, whoever supplies them with illusions is their master, whoever supplies them with the truth, their victim.

If you do not risk anything , you risk even more. Jong

Electric Dick
Bronze Ring
Bronze Ring
Posts: 24
Joined: 27 Feb 2005 13:31

Post by Electric Dick » 03 Nov 2005 12:20

Thanks for the note. I too have TRP and held it for a number of years and have considered doing the same.

Did you purchase anything interesting over the last two weeks, I mean there was a substancial dip in the markets. I usually try to take advantage of these pull-backs by adding to my current positions. I missed this one due to a shortage of cash.

Dick

User avatar
arthur
Gold Ring
Gold Ring
Posts: 4620
Joined: 19 Feb 2005 13:10
Location: The Town of the Blue Mountains

Post by arthur » 03 Nov 2005 12:32

I think the Drugs have been beaten up, I believe they will consolidate, and some are paying Dividends of almost 4%.

No more than 10% of my assets, prepared to wait 5 years .

TRP is stepping out of its area of personal expertise, the cost of the Bruce could be much much more than planned, with Nuclear that seems to be the way.

Personally, i bought Pfizer and will add some PPH for diversification, I also added some Ford Bonds yielding 8%, '08.
You want the truth, you want the truth, you can't handle the truth.

The masses have never thirsted for the truth, whoever supplies them with illusions is their master, whoever supplies them with the truth, their victim.

If you do not risk anything , you risk even more. Jong

Donut
Silver Ring
Silver Ring
Posts: 506
Joined: 01 Mar 2005 15:25

Post by Donut » 03 Nov 2005 16:33

I live near the Bruce plant and have seen the management miracles that have been worked by the CEO Duncan Hawthorne. I have the ustmost faith, not only in his ability to manage the project, (he brought two of the shut down units back on line last year) but in his ability to negotiate a contract with enough built-in protections that any cost over runs will be at someone elses expense.

The refurbishment of these 2 units has been a topic of negotiation for the past couple years. Two years ago Hawthorn addressed the issue in a speech to a group I belong to and he outlined the safeguards and guarantees he would need from the nuke authority, the Province, the fuel supplier and the market before he would even consider the task of refurbishment. The McGuinty government is desperate for this power and I'm convinced that Hawthorne got everything he was looking for.

TRP has been very good to me but I'm not even thinking of selling based on the risk at Bruce Power. My money's on Hawthorne. The day he leaves - I'm outa here!

sydney2
Silver Ring
Silver Ring
Posts: 939
Joined: 05 Sep 2005 19:35
Location: Burlington Ontario

TRANS CANADA PIPELINE

Post by sydney2 » 09 Nov 2005 14:41

Do you ever think the proposed pipeline will get under way, and since TRP is paying 3.45% while we are waiting, I am wondering if I should nibble at this stock. :roll:

Serenity
Silver Ring
Silver Ring
Posts: 151
Joined: 26 Oct 2005 21:21
Location: Scarborough

Post by Serenity » 09 Nov 2005 19:16

Transcanada is one of my core holdings and has been a good long term investment. My initial experience owning this stock was a bit rocky as I bought it for the high dividend yield (when the price was in the low $20's)without realizing the danger. Shortly thereafter the dividend was slashed and the stock tanked below $10. I held on, reinvested the dividends, and waited patiently for the recovery.

Today, I like Transcanada because the management team has stayed focused on their core businesses (pipelines and power generation) and the stock price has slowly but steadily appreciated. I especially like Transcanada's 1/3 ownership of Bruce Power LP which makes a ton of money in Ontario's electricity market.

IMHO this is a good "widows and orphans" type of investment. Don't buy if you are looking for a quick buck based on a major pipeline project.

Post Reply