Why 87% of Wall Street Analysts Rate TransCanada a ‘Buy’
Of the Wall Street analysts surveyed by Reuters, ~86.7% rated TransCanada (TRP) a “buy” and ~13.3% rated it a “hold.” None of them rated TRP a “sell.” The consensus target price for TRP is 72 Canadian dollars. Its stock is currently trading at 62.72 Canadian dollars. If the company attains this target price within a year, it would mean a 14.8% price return for investors.
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As for peers, 86.0% of analysts rated Energy Transfer Partners (ETP) a “buy” and 46.0% rated Plains All American Pipeline (PAA) a “buy.” As much as 97.0% of analysts rated Enterprise Products Partners (EPD) a “buy.”
Outlook for TRP
TransCanada’s operations are diversified across geographies and businesses. TRP has increased annual dividends for 17 consecutive years. Its dividends have grown at a CAGR (compound annual growth rate) of ~7% since 2000. The company expects a CAGR dividend growth of 8%–10% over the next three years. Though the stock is trading at a yield of nearly 4%, its potential dividend growth is attractive.
TransCanada’s cash-flows are largely backed by long-term contracts or regulated operations, which provide a high cash flow stability. The company’s ongoing growth projects provide visibility for dividend growth. All these positives should reflect in TRP’s price going forward.