Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 24 Feb, 25 | TA | Speculative Buy | CAD 15.49 | CAD 17.194 | CAD 18.397 | 14 days | 18.8% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
TransAlta Corporation engages in the development, production, and sale of electric energy. It operates through Hydro, Wind and Solar, Gas, Energy Transition, and Energy Marketing segments. The Hydro segment holds interest of approximately 922 megawatts (MW) of owned hydroelectric generating capacity located in Alberta, British Columbia, and Ontario. The Wind and Solar segment has a net ownership interest of approximately 2,057 MW of owned wind and solar electrical-generating capacity, as well as battery storage facilities located in Alberta, Ontario, New Brunswick, and Québec in Canada; the states of Massachusetts, Minnesota, New Hampshire, North Carolina, Pennsylvania, Washington, and Wyoming in the United States; and the state of Western Australia. The Gas segment has a net ownership interest of approximately 2,775 MW of owned gas electrical-generating capacity, and facilities located in Alberta, Ontario, Michigan, and the state of Western Australia. The Energy Transition segment has a net ownership interest of approximately 671 MW of owned coal electrical-generating capacity, as well as operates the Skookumchuck hydro facility in Centralia; and engages in the highvale mine and the mine reclamation activities. The Energy Marketing segment is involved in the trading of power, natural gas, and environmental products. It serves customers in various industry segments, including commercial real estate, municipal, manufacturing, industrial, hospitality, finance, and oil and gas. TransAlta Corporation was founded in 1909 and is headquartered in Calgary, Canada.
Higher Net Margin: 8.4% in FY 2024 vs 6.0% of Industry Median
Higher ROE: 14.0% in FY 2024 vs 5.3% of Industry Median
Lower EBITDA Margin: 42.8% in FY 2024 vs 49.1% of Industry Median
Higher Debt to Equity Ratio: 5.67x in FY 2024 vs 1.85x of Industry Median
Volatility in energy commodity price, Trade tariff, inflation, interest rates, supply chain issues, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 15.49 | 12.98 | 17.194 | 18.397 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Effective Asset Optimization and Hedging Strategies: The company's business performed well within the upper range of the management's expectations, thanks to strong availability across its generation portfolio and the long-term success of their optimization and hedging measures. Its availability for the fiscal year ending December 31, 2024 improved to 91.2 percent from 88.8 percent in 2023.
Higher production: The company's overall production for FY 2024 increased by 3.5% or 782 GWh to 2,811 GWh, up from 22,029 GWh in the same period in 2023. The rise in production was primarily due to the addition of new facilities, notably the White Rock West and East wind projects, as well as the ones acquired through Heartland.
Increasing gross installed capacity: Recently, the company completed the acquisition of Heartland Generation at a purchase price of CAD 542 million in December 2024. Through this transaction it adds 1.7 GW of complementary capacity from nine facilities, including contracted cogeneration and peaking generation, legacy gas-fired thermal generation, and transmission capacity, all of which will be critical to support its reliability in the Alberta electricity market.
Considering the expected valuation upside, higher production, industry beating net margin, effective asset optimization, decent guidance, current trading levels and key business risks a ‘Speculative Buy’ recommendation has been given on the stock at the last closing price of CAD 15.49, as on February 21, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Utilities Industry: Utilities - Independent Power Producers
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| TA TransAlta Corp |
0.14 1.04% | 13.57 | 36.71 | 38.76 | 1.49 | 4.91 | 3.22 | 8.26 |
| CPX Capital Power Corporation |
0.65 1.36% | 48.48 | 13.86 | 19.42 | 1.96 | 1.97 | 3.29 | 8.68 |
| MXG Maxim Power Corp. |
0.03 0.69% | 4.35 | 11.09 | 54.05 | 2.48 | 1.02 | 3.32 | 5.62 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 21,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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