5-Star Stocks Poised to Pop: TransAlta

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Canadian electricity company TransAlta (NYS: TAC) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at TransAlta's business and see what CAPS investors are saying about the stock right now.

TransAlta facts

HeadquartersCalgary, Canada
Market Cap$4.2 billion
IndustryIndependent power producers and energy traders
Trailing-12-Month Revenue$2.7 billion
ManagementCEO Dawn Farrell (since January 2012)
CFO Brett Gellner (since June 2010)
Return on Equity (average, past 3 years)8.2%
Cash/Debt$433.8 million / $4.1 billion
Dividend Yield6.3%
CompetitorsCalpine
Canadian Utilities
Iberdrola

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 124 members who have rated TransAlta believe the stock will outperform the S&P 500 going forward.

Earlier this week, one of those bulls, All-Star TMFDeej, tapped the stock as a solid income opportunity:

I don't see any specific catalyst that will lift TransAlta's stock in the short term, but it certainly appears to be oversold to me at this point. ...

The fact that [TransAlta] generates half of its electricity using coal bothers me somewhat, but it is in Canada and not the United States so I don't believe that it will be affected by the new U.S. EPA regulations. I'm sure that Canada has its own regulations restricting coal, but as a fuel source coal is actually really cheap right now, which theoretically should be good for the company. ...

[TransAlta] isn't going to knock your socks off, but it looks like a fairly stable way to generate 6% in a low-yield environment.   

Of course, despite its strong five-star rating, TransAlta may not be your top choice. If that's the case, we've compiled a special free report for investors called "Secure Your Future With 9 Rock-Solid Dividend Stocks," which uncovers several other juicy income opportunities. The report is 100% free, but it won't be around forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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