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Fortis Inc. (FTS)
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Northland Power Inc. (NPI)
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Hyatt Hotels Corporation Class A (H)
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Brookfield Renewable Corporation Class A Exchangeable Subordinate Voting Shares (BEPC)
Q: I have held NPI for sometime and am down almost 8%. I know you're not a big fan of the stock currently and prefer BEP, H or FTS. That said, 9 of 9 analysts are rating NPI as a Strong Buy. None of the others are rated as highly. What are you seeing that they do not?
5i Research Answer:
NPI could still do well if rates decline, but so will the others. But, in a market shift, it is often the weaker performers that 'bounce' the most. We see poor execution (missing estimates nearly half the time), poor momentum and weak growth. On an per share earnings basis, 2024 EPS is expected to be less than it was in 2019. We can deal with higher rates provided growth is there, but growth is just not very impressive here. Debt is also high, and keep in mind brokers like companies with debt as it often means future equity financings (or debt maturity rollovers) which generate large fees.