Q: Hi, what do you think would you be the reason that CPX is doing so well lately?
I didn’t buy a year or so ago because it was always rated a notch lower than ENB,TRP, BICP,ATCO etc. Would you say it is a good buy now due to it participating in electricity grid. Or is it getting too expensive?
Thanks
I didn’t buy a year or so ago because it was always rated a notch lower than ENB,TRP, BICP,ATCO etc. Would you say it is a good buy now due to it participating in electricity grid. Or is it getting too expensive?
Thanks
5i Research Answer:
We had ranked it lower due to debt and relatively low earnings growth. Even now, based on consensus, EPS is expected to decline in 2024 and decline again in 2025. It missed estimates in the Q2. The stock is cheap, and with lower interest rates its dividend (raised in July) becomes more attractive. But a lot of the gains do likely come from investors looking for AI-ancillory investments. Most power companies have done very well. Some in the US have doubled this year on this theme. At 13X earnings, we would consider it a 'decent' buy today. We would really like to see the growth profile improve though before getting fully behind it.