Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Edmonton-based Capital Power Corp. is one of Canada’s largest independent power producers, owning over 3,600 megawatts of power generation capacity at 15 facilities across North America. It has another 600 or so megawatts under construction or in advanced development. It has a market cap of $1.7-billion and its fleet generates power from natural gas, coal and solid fuels, and wind. Capital Power was formed in 2009 when EPCOR (whose roots go back to 1891) split off its power generation business.
Capital Power has a 6-per-cent dividend yield. It trades for a reasonable 15.2 times trailing 12-month EPS and has a 0.67 PE-to-growth ratio, which the Peter Lynch-based model likes.
The firm also trades for just 0.5 times book value and 2.7 times cash flow, part of why the David Dreman-based contrarian model has some interest in the stock.
The Lynch- and Dreman-based models like Capital Power's debt/equity ratio of about 75 per cent, which is about half the 145-per-cent industry average.
The company has a 2.7 current ratio, which the Dreman- and Benjamin Graham-based models like, and it has a stellar 36.8-per-cent free cash flow yield.
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