Canadian Hydro Developers a high-powered stock
The company generates about 364 megawatts through run-of-river, wind and biomass plants in British Columbia, Alberta, Ontario and Quebec. It also has several hydroelectric and wind projects in the pipeline.
However, permitting holdups have forced delays on some of those projects, introducing cost overruns. But for Mr. Isaacson, the company is worth the risk. “We believe the company is undervalued,” he said.
Mr. Isaacson expects Canadian Hydro Developers to add about 400 MW of capacity in the short to mid-term. The company's proposed Dunvegan hydro project in Alberta, which may be confirmed by the first quarter of 2009, will also be critical, he said.
“If commissioned on-time and within budget, this project could add up to $1.50 per share to (Canadian Hydro's) stock price,” he said.
Other selling points for Scotia Capital include a strong 19-year management track record and plenty of stock catalysts in the next 12 to 18 months as Canadian Hydro Developers continues to bid for new projects in British Columbia and Ontario.
Mr. Isaacson based his valuation on a 75%-weighted discounted cash flow approach using a 9.5% discount rate. He also used a 25% net asset value calculation.
Related News
Feds to study using electricity to 'reduce or eliminate' fossil fuels
OTTAWA - The federal government wants to spend up to $300,000 on a study aimed at understanding whether existing electrical technologies can “reduce or eliminate” fossil fuels used for virtually every purpose other than generating electricity.
The proposal has caused consternation within the Saskatchewan government, which has spent months attacking federal policies it believes will harm the Western Canadian energy sector without meaningfully addressing climate change.
Procurement documents indicate the “Electrification Potential Study for Canada” will provide “strategic guidance on the need to pursue both electric and non-electric energy research and development to enable deep decarbonisation scenarios.”
“It is critical that (Natural Resources…
