Canadian Hydro Developers: High-Powered Alternative Energy Stock

Scotia Capital's Ben Isaacson is gushing over the earnings potential of Canadian Hydro Developers Inc. (CHDVF.PK), predicting a 300% jump in EBITDA by 2011 and a one-year target price of C$7 per share for the sustainable-energy producer.

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.

He said:

We believe the company is undervalued.

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.

He continued:

If commissioned on-time and within budget, this project could add up to C$1.50 per share to (Canadian Hydro's) stock price.

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.

Comments

[Steven Ward:]

It is stocks such as this one that gives me pause to reflect inclusion into an investment portfolio along with Canadian REITS doing business in Canada's oil patch.
My interest is raised when I see no comments posted.
Alternatives to oil and gas maybe more wider spread than oil service and drill stocks.
I need to get to know more companies in these categories.

2008 Sep 06 03:45 PM

[alongperu:]

You might look at Temple REIT, mostly in
Alberta. looks good to me.

2008 Sep 08 04:14 PM

[OhioInvestor:]

I am new to the investment world and have just begun my research. I bought a few shares of CHDVF (KHD.TO) to see where it goes...

2008 Sep 11 07:00 AM