Algonquin Power & Utilities Corp (AQN.TO)

Short. All the utilities are falling into this bucket of being expensive. Utility stocks are going to be under pressure. They are expensive and carry a lot of debt.

The company said they were delaying the release of their financials, and investors got very worried that there was something wrong. The stock fell off aggressively and the company then announced that there was nothing material that they could find. They then came out with their financials indicating a good quarter, and the stock rebounded. Half of the company is regulated utilities and the other half is renewables that have growth and upside. It strikes a nice balance between safety and growth. Pays a good dividend.

There is a lot of volatility to this story over the last couple of weeks. Management did come out and address why it was down so much over the last week or so. News came out about accounting issues. The earnings don’t alleviate that and we have to get to the bottom of these accounting issues. Wait in case there is more risk to the story than we are aware of now.

All the interest rate sensitives, which include the utilities, are affected by the fear of rising longer-term interest rates. On this one, there is an uncertainty and the stock has come off pretty sharply.

Chart shows a series of higher highs and higher lows from late 2013. That trend was broken earlier this year. The next level of support is going to come in at around $8. Not sure that he would Buy at this point as it might have another $.70-$.80 to go. Chart is not a great-looking one.

Has been beaten up incredibly in the last couple of days, on an accounting story. Doesn’t know what the potentials could be. It looks like there is an investigation, but he doesn’t know any more about that. The market tends to sell now and ask questions later. He would be inclined to try to get more information by watching the newspapers. You don’t want to necessarily sell it if there isn’t really an issue at all.

(A Top Pick Feb 28/14. Up 37.52%.) They have been doing a lot of right things. A well-managed company. Current target is $10.50. Yield of 4.1%. He has been adding to his holdings.

(A Top Pick Jan 24/14. Up 48.74%.) He likes the power and he likes the utilities. He’ll be continuing to add to his holdings when he brings some cash back in.

Along with a lot of other utility stocks, this has gone on a tremendous run, especially in the 2^nd half of last year. Have some smaller projects that they’ve been able to bring on and they have had one of the most successful years. A great stock to hold. He owns this through his position in Emera (EMA-T), which owns a significant stake. Nothing wrong with Algonquin, but the valuation might give you a bit of a pause.

Dividend is absolutely safe. A nice stable business model. CEO has a great track record and he thinks they will continue to grow out the business model. The dividend could grow 8-10% over the next couple of years and cash flows will grow to support that. They just did an equity raise to shore up the balance sheet.

Just added a bit to his portfolios. It is a good story. Yield of about 4%. He likes the utilities. They are being built. These make a lot of sense. His company has a $10.50 target on this a year out.

He is concerned about the interest rate sensitivity. But it makes sense to own this one. Decent growth and profit prospects.

They are now declaring the dividend in US$’s. As a Canadian recipient of that US dollar income, you don’t know for certain what your payments are going to be. For some people, having a US income is a good thing. On a longer-term basis, this company did cut their dividend, but are slowly restoring it. Have some interesting growth potential with the pipeline going into Massachusetts. A very attractive kind of portfolio holding.

This has been one of his favourite stocks. He sees their free cash flow rising 30% compounded annually over the next couple of years. This is from new projects coming online and future rate base hikes. Sees them paying a sustainable 4% dividend, anchored by a 65% payout ratio. He models high dividend growth of 11% compounded annually. It still trades cheaper than its peers.

(A Top Pick Oct 2/13. 45.6%.) This is an interest-rate call. Also, based on the view that markets are not going to be easy over the next 12 months as they were over the last 12. This is a power/utility, a kind of gentle place to be. Yet they've got 30% adjusted earnings growth that he models over the next couple of years. Cheap at 8X versus its peers of around 7.7. He models a 10% dividend growth over the next couple of years. Dividend yield of 4.39%.