TransCanada: With or without Keystone

TransCanada Corp. (TRP) has underperformed every other North American pipeline company since early November 2011.

That�s when the Obama administration officially put the company�s Keystone XL project on hold.Despite this move, we are making this stock a new core holding in our model growth portfolio.

This $7.6 billion extension to the existing Keystone Pipeline System would be an expressway for Canada�s immense tar sands to US Gulf Coast refineries.

It enjoys strong support from Republicans as well as labor unions, but it�s bitterly opposed by the environmental lobby. The president has avoided choosing between these key constituencies until after the Nov. 6 elections.
Ironically, TransCanada is on track for strong growth with or without Keystone XL. Fourth-quarter earnings surged 35.9 percent on a 15 percent boost in sales, fueled by roughly $10 billion in energy midstream assets placed into service since mid-2010.

Management anticipates bringing another $12 billion worth of assets into service by early 2015, including the restart of the Bruce Power nuclear plant in Ontario, extensions/expansions of its Alberta pipeline system and massive wind and solar projects that will sell power under lucrative contracts.

Building Keystone XL would be a major upside catalyst for TransCanada�s earnings, dividends and share price. But even without it the company will have no problem matching its recent 5 percent dividend increase.

The Bruce Plant, for example, is on budget and will generate up to 25 percent of Ontario�s electricity under a long-term contract, starting in the second half of 2012.

During the company�s fourth-quarter conference call CEO Russell Girling cited more than $50 billion in potential future energy infrastructure projects.

This is nearly twice the company�s current market capitalization and will fire up low-risk growth to the end of the decade and beyond. Buy and lock this one away up to 45.




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