TransAlta Renewables: 6.9% Yield On The Lowest Leveraged Utility

TransAlta Renewables (OTC:TRSWF) is one of the best kept secrets of the renewables market. The company has struggled to convince the market of its potential. In spite of having a diversified portfolio of clean energy generating power plants in Canada, Australia and the US, an asset class that is in high demand, the stock has not delivered up to its potential. That has not stopped us from getting a good position here. We take this opportunity to explain why this is a fantastic bargain and where the upside can come from.
The Business
The total generating capacity of TRSWF is over 2,500 Megawatts with additional investments pipeline investments in Australia.

Source: TRSWF May 2019 Presentation
Investors may object a bit to the word "renewables" when 46% of the cash flow is tied to natural gas. This is definitely a work in progress as TRSWF has made more investments in other wind and solar with the hope of swindling this percentage over time. Natural gas, while not a carbon-free source, is still significantly less polluting than coal, and while TRSWF's may not be all renewables yet, it is definitely one of the cleanest and least polluting utilities out there. The assets have long contracts with significant amounts in places where there is active de-emphasizing of coal utilization, such as Alberta.

Source: TRSWF May 2019 Presentation
Longer term, we see TRSWF's assets getting more valuable over time, even as contracts come up for renewal.
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