TransAlta (TAC), mcap=$2.3bn, price $8.56 vs $9.40

$TAC pitch:
– Decarbonization play on an independent power producer that is turning towards 100% renewable energy.
– Takeout candidate at 2x of the current price.
– TAC is down YTD despite numerous positive developments.
– Set to benefit from high electricity prices in 2023/2024 once the current hedges roll-off (75% hedged for the remainder of the year).
– The Canadian government is rolling out a clean electricity standard that massively incentivizes renewables buildouts and TAC has an enviable pipeline to execute with its converted gas plants getting preferential treatment.
– Has retired the remaining coal plants and will be fully off coal by 2025.
– An established renewable energy platform is a scarce asset and M&A in the space has accelerated.
– Potential takeout target by its largest shareholder $BEP.

$TAC valuation:
– Excluding $RNW stake one is buying the remaining assets at less than 6xEBITDA.
– SOTP valuation indicates C$16.5/share target today.
– Worth at least C$17-C$18/share in $BEP takeout scenario.

Exp. gain: +90% to $18/share.

Full TAC write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/TRANSALTA_CORP/0964826638

Published on: November 3, 2022  •  Published by:
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1 COMMENT

  1. HomeSpunoff

    @DT – do you (or anyone else at SSI) ever invest in these VIC writeup stocks? I’d be interested to know if you own this stock (and your confidence in the idea…as evidenced by what percentage of your portfolio is invested in it). Thanks!

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