Tuesday, August 02, 2016

Alterra's Renewable Power Portfolio

A little known Vancouver company, Alterra Power Corporation, is the new face of electric utilities.  The company operates power plants with a total of 1,200 megawatts of owned generating capacity  -  all from renewable energy sources.  The Alterra portfolio includes hydroelectric, wind, geothermal and solar power projects located in North America.
In July 2016, Alterra expanded its portfolio by acquiring 80% interest in two solar power projects in the U.S. with total power generating capacity of 20 megawatts.  The first project  - a 7 megawatt plant in Indiana  -  is expected to be completed by the end of 2016.   The remaining 13 megawatts will come from a second solar power facility in Michigan that will be under development in 2017.  Alterra will be working with the project originator and 20% owner, Inovateus Solar, to complete the projects.
It looks like a good deal for both parties.  Inovateus is an engineering firm with a focus on solar power development and claims 250 megawatts of power installed and under development.  Alterra is not a large company, but appears to have more experience than Inovateus in raising capital.  The acquisition announcement suggested that Alterra is already working on financing for the Indiana solar power plant, but kept silent on the price tag for the 7 MW plant.  Alterra will have a key trump card to play in negotiating for capital. Power supplies are already under long-term power purchase contracts, a key to extracting returns from power facilities.  
Alterra’s stock trades under the symbol AXY on the Toronto Stock Exchange and is quoted as MGMXF by the U.S. OTC Quotation Service.  Price near two bits per share, the stock appears to be valued more as an option on the portfolio pipeline than on future earnings.  Trading volume is typically around 75,000 shares per day, which for some might not provide sufficient liquidity.  What is more, the bid-ask spread is fairly wide, so it is wise to only take a position in Alterra for a long-term hold.  For those with a more short-term and less risk-oriented view, Alterra may be worthwhile to put on a list of stocks to watch.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

1 comment:

Tom Konrad said...

You should look at the native Toronto quote for trading statistics. TSX average 3 month volume is 329K shares, and spread is 1 cent.