TSX:CPX - Post Discussion
Post by
NewOpportunist on Dec 12, 2023 8:29am
Preferred pick at Desjardins Securities with $51 target
Mr. Stadler selected Capital Power Corp. (CPX-T -1.66%decrease) as his “preferred name” for 2024 with a “buy” rating and $51 target, down from $53. The average is $45.11.
“We view CPX as the value and dividend growth player within our space,” he said. “It is currently trading at 6.2 times EV/EBITDA compared with renewables peers at 10.9 times; while a discount is warranted, we believe the current spread is too wide. Additionally, given its solid payout ratio (40 per cent) and below-peer debt levels (2.3 times net debt/EBITDA), its balance sheet is in very good shape, which supports its 6-per-cent annual dividend growth guidance out to 2025.”
“In our view, CPX has the ability to drive real change in its emissions profile, which should earn a re-rate and create value for shareholders. CPX plans to remove the remaining coal in its portfolio by mid-2024 and to repower these facilities to become some of the most efficient gas assets in North America (generating carbon credits rather than paying a carbon tax); it plans to further clean up these assets through a carbon capture solution (by 2027), removing 7.5m tonnes of emissions in total from its portfolio. We believe green thermal assets should be valued closer to renewables peers, which could provide significant upside from current levels.
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