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Fortis Inc. (FTS $71.96)
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Brookfield Renewable Partners L.P. (BEP.UN $41.05)
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Capital Power Corporation (CPX $71.14)
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TransAlta Corporation (TA $24.16)
Q: Brookfield was a significant beneficiary of large investments in clean power from the tech giants. Do you see other utilities in Canada or US benefiting similarly in the future? It seems that the utilities space offers a potentially stable growth space going forward with power demand going up. Is this worth the effort, for example, compared to chips or software as a growth investment avenue.
5i Research Answer:
The trend towards higher demand (much, much higher than previously expected) should benefit all companies in the sector. However, capital, capacity, location and relationships will play a role in whether other companies can capture 'big' power deals. Capital availability is likely the biggest constraint. Not all companies can promise giant power availability over a 10 to 20 year term. Customers are quite desperate for power security and this becomes a very important factor. The sector is also regulated which can slow things down as well. But, certainly the growth of AI and data centres is a big new positive influence for the sector, and we have seen valuation multiples, particularly in the US, rise well above long term historical levels.