TransAlta Corporation (NYSE:TAC) has been recognized as one of the top Canadian dividend stocks to invest in for the next five years. Recently, TD Securities gave TransAlta a Buy rating and set a price target of C$26 after the completion of a bought deal equity offering. Despite a 13% pullback in the stock since the announcement of TransAlta’s acquisition of Colorado gas-fired peaking assets, TD Securities believes that this move aligns with the company’s expansion strategy in the Western US.
The acquisition includes two natural gas-fired peaking facilities near Denver, Colorado, which TransAlta bought from Blackstone for approximately $1 billion. These facilities, Mountain Peak Power and Canyon Peak Power, have a combined generation capacity of 318 megawatts and are under long-term tolling agreements with investment-grade customers for over 25 years. The transaction also involves assuming $750 million in project-level debt and raising about $250 million in equity through a C$350 million bought deal share offering.
With an expected annual adjusted core profit of $80 million and around $33 million in free cash flow from these facilities, TransAlta is poised to benefit from the growing demand for electricity in the Western US power market. Power producers are increasingly adding flexible gas-fired generation capacity to meet the rising electricity demand, driven in part by the growth of power-hungry data centers.
TransAlta Corporation owns, operates, and develops a diversified fleet of power generation assets across Canada, the United States, and Australia. The company focuses on supplying affordable, energy-efficient, and reliable electricity to municipalities, businesses, industrial customers, and utility providers.
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In conclusion, TransAlta Corporation’s acquisition of gas-fired peaking assets in Colorado positions the company for growth in the Western US power market. With a strong focus on providing reliable electricity and expanding its presence, TransAlta remains a key player in the energy sector. Investors should carefully consider their investment options and explore opportunities in both traditional and emerging industries for long-term growth and profitability.
