Stock Market Series

How Are My Picks On Stocks (Part 1)?

 

I have included these companies in my Stock Watch List because they are power producing companies that are publicly traded companies that pay dividends.   But do they all have durable competitive advantage?

Let’s take a look!

Capital Power Corporation (TSE:CPX)

Capital Power Corporation is a North American power producing company that is headquartered in Edmonton, Alberta.  The company is engaged in the operation of electrical generation facilities within Canada, including Alberta, British Columbia and Ontario, and in the United States, including North Carolina, New Mexico and Kansas. It also holds a portfolio of wind and solar development sites in the United States. It owns over 3,200 megawatts (MW) of power generation capacity at approximately twenty. facilities across North America.  Moreover, the company owns natural gas, wind, and solid fuel facilities in Canada and the United States.

Here is the company’s financial statement analysis from 2013 to 2016 (I forget all of the accounting formulas):

Screen Shot 2017-11-01 at 5.47.51 PM

As we can see, it is not a good time to invest in Capital Power now because the company has negative retained earnings and high return on capital expenditure (meaning the company is using a lot of money to maintain its power plants).

Northland Power Incorporated (TSE:NPI)

Northland Power Incorporated is a developer and owner of clean and green power facilities since 1987.  The company is dedicated to developing, building, owning and operating clean and green power projects in Canada and other countries around the world by using natural gas, biomass, wind and solar technology.  Furthermore, the company currently operate facilities that generate 1,754 MW of electricity, with an additional 584 MW of generating capacity under construction since Northland started.

Here is the company’s financial statement analysis from 2013 to 2016:

Screen Shot 2017-11-02 at 11.30.19 PM

Likewise, it is also not a good time to invest in Northland Power now because of the company’s negative retained earnings and high return on capital expenditure.

Canadian Utilities Limited (TSE:CU)

Canadian Utilities Limited is a diversified global corporation delivering service excellence and innovative business solutions in Structures & Logistics (workforce housing, construction, logistics and operations management); Electricity (electricity generation, transmission, and distribution); Pipelines & Liquids (natural gas transmission, distribution and infrastructure development, energy storage, and industrial water solutions), and Retail Energy (electricity and natural gas retail sales).  The company employs approximately 5,400 employees and holds assets of $20 billion Canadian.

Here is the company’s financial statement analysis from 2013 to 2016:

Screen Shot 2017-11-03 at 12.19.08 AM

Although Canadian Utilities has positive retained earnings, the company’s return on capital expenditure and debt to shareholders’ equity are quite high.  Having a high debt to shareholders’ equity means Canadian Utilities is using debts to fund daily operations.

Ultimately, it is CRUCIAL to take a peak at the company’s financial statements before making investment choices.

In the next post, I will finish analyzing the financial statements of the remaining companies in my Canadian Stock Watch List: Imperial Oil (TSE:IMO), BCE Inc. (TSE:BCE), and Cogeco Inc. (TSE:CCA).

Please leave a comment below! Catch you on the flip side!

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