A Mid Cap Stock with a Great Dividend & Growth

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Today we profile a mid cap Canadian stock that has almost reached utility status. The CymorFund Blog is a subscription service. Blogs about stock picks we add to our portfolio are available immediately only to Premium subscribers. All Subscribers have immediate access to the other categories of our Blogs, including Stock Picks that we have sold.

 Algonquin Power & Utilities Corp.

Chart 2014 - 2015
eSignal
This is a stock that has relentlessly marched higher. It started in 2010 at around $3.50 after converting from an Income Trust under Canadian Tax law to a corporation.. It consistently moved higher reaching above $8.00 in 2013. The rise was too dramatic, and profit taking hit the stock dropping it to $6.00 by October on a sustained slide. Then in November 2013 it once again started its relentless move up, topping over $10.00 / share in February 2015.
 
Then SCANDAL.
Accusations about internal anonymous allegations relating to APUC’s workplace environment.A special committee is appointed to investigate.
 
Then Canada Revenue Agency threatens to reassess “Algonquin Power & Utilities Corp. (“APUC” or the “Company”) (AQN) reported today that, similar to reports from other corporations that have undertaken income trust conversions, it has received a letter from the Canada Revenue Agency (“CRA”) advising the Company that, subject to submissions by the Company, it is proposing to reassess APUC’s 2009 through 2013 income tax filings in relation to a unit exchange transaction that occurred on October 27, 2009….”
 
Then objections to some proposed acquisitions  ” APPLE VALLEY — The Town Council will hold a special meeting Tuesday evening to inform citizens about the possible purchase of the town’s municipal water system that is owned and operated by Apple Valley Ranchos Water Co.“
 
The stock paused, and dropped.  By March 2015 it plummeted to around $7.50, almost instantly recovering to $9. Then meandered in the $9 to $10 range until now. A stock that was stable and reliable, now has had two dramatic swings in value.
 

What Does Algonquin Do?

To quote the company,  Algonquin Power & Utilities Corp. owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Their mantra is “A growing portfolio of utility assets”   “Sustainability through social, economic and environmental values”

Algonquin just keeps buying sustainable long term assets throughout Canada and the USA, mostly in the USA these days.

Algonquin Power Company owns a direct or indirect equity interest in more than 35 clean energy facilities including:

  • wind
  • solar
  • hydroelectric
  • thermal

Somehow, the company keeps finding assets that appear to be acretive to its earnings. Sometimes with the odd bump or two, and that causes the stock to fluctuate.

Dividend Anyone

The company pays a very nice dividend of 4.4% on its current stock price.

 

The Opportunity

This stock has meandered recently due to these minor issues, and today is trading almost a dollar below its high of 2015. However the issues are being cleared up, as recent press releases note, and this is a temporary trading opportunity. We added AQN today at $9.89.

We will look to sell our position when the stock recovers.

 

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By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.

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