Transalta Corp

I have been gradually getting back into the stock market. The reason I review stocks and also publish my results is to help me think more critically on what I am doing. This company (TSX-TA) has just published the results (unaudited) for the year ending in 2008. I am updating both this company’s spreadsheet and my index spreadsheet. For the index spreadsheet, see indexport.htm.

My goal is to earn dividends to support myself and have a portfolio that is largely of financial institutions and utilities. Although utilities do not give you the growth and return of other stocks, they tend to be very stable producers of dividends. This company will fit the bill of a stable producer of dividends.

Although the growth in Revenues for the last 5 years at 4% is not great, it has grown its revenue by 12% for 2008 after several years of stagnating revenue growth. The 10 years revenue growth at 11% is much better than the 5 year growth. After having the same dividend of $1 since 1999, this company has increased their dividends by 8% and 7.4% for the last two years. The current yield is 5.3% and it is higher than the average 5 year yield of 4.1%.

Looking at other reasons that this stock is at a good current price, I see that the P/E of 14% and the trailing P/E of 18.5% is lower than the respective 5 year averages of 22% and 21%. The accrual ratio is negative and this is also a good sign.

No stock has all the desirable features for buying and this stock has some negative features. The Liquidity Ratio and the Asset/Liability Ratio are low at .56 and 1.47 respectively. When you have a bear market, it is also a bad time to have low liquidity. Also, the growth in Earnings per Share (EPS) for the last 5 and 10 year periods is bad at -1.3% and -1%. However, most analysts expect that the earnings for 2009 will be much improved.

I have decided today to buy some more of this stock and this will raise the percentage of this stock in my portfolio to almost 3%. Tomorrow, I will look at the last 3 stocks recommended by Stephen Gadsden.

It is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Most of its generating capacity is coal-fired, but it does produce electricity from both hydro power and alternative energy. Its web site is www.transalta.com. See my spreadsheet on this company at www.spbrunner.com/stocks/ta.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.