PeterM1 wrote: While shareholders in Crius Energy (KWH.UN) debate whether to accept the latest offer for their shares or hang in for a possible third, they may be missing out on the potential gain in KWH competitor Just Energy (JE). KWH has seen it share price rise 96% this year. JE by contrast has hardly moved - up only 4.4%. Seeems to me JE right now is simply better place to be invested.
In my opinion, JE is a far better company than KWH. It has:
Better prospects : JE commenced business in July1997 as the Ontario Energy Savings Corporation and was listed on the TSX in March 2001 (changed its name to Just Energy in 2012) In the long time it has been around, it has gained much experience and matured over the years. It has acquired a very seasoned customer base which is now diversified beyond North America to Germany, Ireland, Japan, and the United Kingdom. Its operational methods and objectives seem to be stabilizing. By contrast, KWH founded in 2012 was, at the time of the take over bid, still showing lots of growing pains.
Better numbers : Roughly (repeat roughly ) these are the comparative current numbers:
| Company | Market value | EBITDA estimate for 2019 | Ratio |
| | | | |
| Crius | 500 million | 80 million | 6.2 * |
| Just Energy | 700 million | 200 million | 3.5 |
* Vistra projects the ratio at 4.0
By my book, JE should be trading at closer to $6.00 to yield about 8% instead of 10.25 % as it does now. This would bring more in line with the bids placed for KWH.
However that is not the end of the story. The real importance of the Vistra bid is that it gives fresh respectability to “energy retailing” sector of the market. Vistra is essentially a mainstream energy generating company - coal, gas and nuclear - that operates in 7 states with its main base in Texas. Vistra finds KWH an “attractive” investment - and so they should. These days constructing new power generation units is an expensive and time consuming proposition with low returns. Vistra could well be just the forerunner of further take overs in the “energy retailing” sector by the traditional generating companies. There is long list of potential candidates - think Duke, Southern, Florida and Consolidated Edison just for starters.
But as the late Steve Jobs would have said - that’s not all.
Prior to the takeover bid for KWH, both KWH and JE were subject to substantial short sale activity. JE presently has about 8% of its shares out on loan which will take 47 days to cover at current volumes. KWH bears must have got creamed by the Vistra takeover bid and JE bears must now be feeling a tad nervous. Could there be a squeeze play in the making here?
Lastly and sadly, the second largest shareholder in JE, Ron Joyce, recently died. Ron Joyce was better known as being the co founder of Tim Hortons ( now restaurant Brands which includes Burger King). It is not known what will happen to his stake but certainly it could provide an entry point for a take over bid.
Add all this up and it looks to me that KWH shareholders who are still hanging in there might be better off switching their investment into JE. Simply put - there is just more upside potential there.