BeVault.Residential.Solar_.EnergyStorage

Next generation tech – what will drive home battery systems in North America:

Growth Drivers In The North American Residential Energy Storage Markets

Summary

  • Technology, policy and cost reduction remain critical components.
  • Residential energy storage’s role in Net Metering 2.0 programs.
  • Different opportunities on how to play this emerging niche market.

A combination of low-cost solar PV systems, increasing number of electric vehicles being built, and changes in policies is encouraging the mass deployment of residential energy storage systems. Although the industry is still in its early days, all the necessary components have already begun to fall into place, ensuring a very bright future for the industry.

Until recently, solar PV could only be used to offset a home’s electric requirements when the sun was shining. Beyond this time frame, the home would need to call upon the electrical grid to fulfill the balance of its energy, and when the solar PV array would overproduce, additional electricity would be exported back into the grid. This setup makes it absolutely ideal to go solar.

However, a number of components are changing the face of the residential solar PV market. The three changing critical components are: technology cost, innovation, and policy.

Policy – Across the United States, there is a growing number of utilities which have hit their renewable energy requirements and have begun to push back against homeowners who want to export electricity when they are not home to use the power. Utilities across the board have begun to dismantle programs which incentivize homeowners to go solar. This is achieved by decreasing the value of the exported electricity which ultimately prolongs the payback period of a solar system. There are also a number of utilities which have introduced residential time of use and demand charges or no longer allow homeowners to export electricity back into the grid creating a net zero export limitation. The following are a number of scenarios which are driving sales today:

  • Net Metering 2.0 – Removal or change of net metering programs across the country and various Caribbean islands in order to control PV saturation, grid stability, a fair distribution of transmission cost, and utility revenue.
  • Devaluation of Exported Solar PV – A shift to wholesale or an avoided cost for exported electricity such as seen in muni, rural cooperatives, small and large utilities.
  • Net Zero Export Limitations – Hawaii has been the first market to adapt such standards due to high day time PV load penetration rate at certain feeders which is becoming increasingly common along with many areas in the Caribbean.
  • Time of Use Rate Structures – The implementation of various rate structures which will place the highest cost electricity during evening time frames until late in the evening.
  • Buy All, Sell All Programs – Several regions are moving towards a buy all electricity which is produced from homeowners which seriously devaluates the value of solar PV and forces the homeowner to sell his electricity for less than retail.
  • Residential Demand Charges – implementation of demand charges in the residential rates as first seen on a broader scale in the Phoenix Metro area.
  • Net Metering Credit Expiration – In some regions, net metering credits accumulated are non-transferable and expire at the end of the calendar year.
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Riding New Flyer To The Bank

Summary

  • New Flyer is well positioned within the North American transit market and continues to invest in its technology platforms.
  • The company has a rather large back order, strong customer base and solid performance track record.
  • The companies and their dividends meet my investing guidelines & a review of what the street has to say about New Flyer.

For those who are familiar with my investments will conclude that I am a strong believer and supporter in the Canadian banking system. The Canadian banks offer dividend investors an excellent investment opportunity because they have a strong track record of delivering dividends while increasing them over time. Outside of the dividends they offer very little risk to investors as they are resilient to economic failure which was demonstrated during the financial crisis of 2008. However, as an investor I seek out qualify companies which meet the same criteria as the Canadian banks, which is: leadership position in their industry, strong balance sheet, annual dividend yielding over 4%, track record of increasing dividends, moderate Price to Earnings Ratio and limited fluctuation in the stock price.

For those who are unfamiliar with New Flyer Industries (OTC:NFYEF), they are a Canadian based manufacturer of heavy-duty transit buses in North America. The company is a technology leader in the space and offers drive systems powered by: clean diesel, natural gas, diesel-electric hybrid, electric trolley and now, battery-electric. Further, New Flyer also operates the industry’s most sophisticated aftermarket parts organization, sourcing parts from hundreds of different suppliers and providing support for all types of transit buses.

Personally, I view this as an exciting niche market space as public transportation will only continue to grow for various reason including: environmental benefits, a shift to urbanization which will drive demand for mass transit and the cost effectiveness over other forms of mass transportation. The business itself is rather bullet proof; during times of economy uncertainty the North American federal governments are dumping capital into municipal projects including transportation. During times of economic expansion governments continue to invest heavily in mass transportation because it is a good political platform which has a positive effect on local communities. Essentially, mass transits is a feel good story with the bus market being the most practical and easy to deploy in scale.

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banks

Short Attack On Canadian Banks Is Overblown

Summary

  • An overview of the current short attack on the Canadian banks.
  • Why the current and potential upcoming short attack is overblown.
  • A short-term strategy for profiteering off of the swings.

In the past months, a number of foul macroeconomic items have taken a toll on Canadian banks which has created a perfect storm for short sellers. The underlying fundamental issues associated to the Canadian economy include an overall slowdown in the Canadian economy, a devastating drop in oil prices, the plunging Canadian dollar, and the possibility of a housing implosion. It is in my opinion that none of these are significant direct threats for the large 6 Canadian banks which include: Canadian Imperial Bank of Commerce (NYSE:CM), Toronto-Dominion Bank of Canada (NYSE:TD), Bank of Nova Scotia (NYSE:BNS), Bank of Montreal (NYSE:BMO), Royal Bank of Canada (NYSE:RY) and National Bank of Canada (OTCPK:NTIOF). Secondary Canadian banks focused on commercial lending include Canadian Western Bank and Laurentian Bank of Canada (OTCPK:LRCDF).

First, the Canadian banks have been heavily tied to oil prices which have obviously plunged in recent months. Sure, lower oil prices will not be good for western Canada but I fail to see the correlation between the Canadian banks and oil prices. Further, the Canadian banks are highly unlikely to finance junior oil and gas plays beyond smaller credit lines which would collectively amount to nothing, considering the debt books that the banks carry. In Canada, junior oil and gas plays are financing through public vehicles on the Toronto Stock Exchange. A review of the Toronto Stock Exchange and the Toronto Venture Exchange will show that a vast number of public companies are financed through bonds and share issuances. At what point did the chartered banks start financing the oil and gas sector? Do investors actually believe that property owners will suddenly lose their properties and that it will dramatically impact the balance sheets of the Canadian banks? Have investors lost sight into how financially stable the Canadian banks are? It is so obvious that there are few correlations between the two sectors. I simply do not see the economic ramifications of a temporary pullback in crude prices, as it is highly unlikely that crude prices will remain depressed for an extended period of time.

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CIBC

Canadian Imperial Bank Of Commerce: Next Stop $110?

Summary

The recent pullback represented a good opportunity to open or top up a position in the bank.

Company fundamentals remain strong and continue to improve.

According to analysts the stock still has room to grow.

On October 24th I recommended to buy shares in Toronto Dominion Bank of Canada (NYSE:TD) (see Buy TD Bank on Price Dips and Hold), or TD Bank, as shares in the company had been punished in parallel with the Toronto Stock Exchange. After careful examination of macro level news, it was apparent that the recent pullback was nothing more than a market correction, which in my opinion presented a buying opportunity. Since the document was published, shares in TD Bank have rebounded approximately 2.3%. In that same time frame, shares in the Canadian Imperial Bank of Commerce (NYSE:CM), or CIBC, slid to $96/share (all figures in CDN) from around $108/share and have since rebounded to current trading levels around $102/share. This represented a short term trading opportunity, or an excellent opportunity to open or increase a position in CIBC.

Most of the recent negative market news was based on activity in China and Europe so I fail to see the correlation between CIBC and the negative macro news. Of course, any significant macro news will still impact shares in all the Canadian banks, but I fail to see how the macro news would impact midterm earnings. In fact, shares in CIBC are trading at a healthy Price to Earnings ratio of around 13x and the company continues to increase dividends on the back of strong earnings. The recent dip in share price was an excellent opportunity to increase or open a position. Based on a 14x EPS, CIBC would be valued at $110/ share, which represents a healthy return for those that were able to buy shares on the recent pull back. If the stock reaches $110/share then I would consider selling my position that I acquired on the recent pullback.

Growth in Wealth Management

CIBC is primarily focused on the Canadian retail and business banking markets and has recently indicated that they will seek growth through acquisition in the wealth management arena. With the Canadian retail and business banking markets becoming hyper competitive it will be difficult for CIBC and other banks to increase profits from this market. Less notably, Credit and Saving Unions have surged forward in the past couple of years, presenting challenges to Canadian banks at a regional level. In Canada, there have been flurries of mergers and acquisitions within the Credit and Saving Union industry that don’t present a significant risk to Canadian banks, but are surely making the retail banking industry extra competitive.

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Canadian Banks Outpace Fixed Investments

Summary

  • Review of interest rates, impact on investments, and an introduction to Canadian bank shares.
  • Saving accounts and government issued bonds are non-ideal against current inflation rates.
  • Review of several banks who offer dividend yield rates higher than current inflation rates.

As the global economy continues to show slow growth rates, central banks have moved to avoid hikes in interest rates. Low interest rates are expected to keep populations, businesses and governments spending new capital, while an increase in interest rates could deter new consumer spending and business cap expenditure spending. From a high level this represents the current situation in America and other industrialized nations. It is in my opinion that the current period of prolonged low interest rates is far from over and could easily carry on to the end of the decade. The current period of prolonged low interest rates bring the possibility of increased inflation which can greatly impact the value of cash. Canadian banks have traditionally been viewed as income-generating investments paying handsome dividends while growing profits have recently seen an increase in appetite for their stocks which is partially related to low interest rates.

As retail investors lack alternative investment opportunities that allow them to beat inflation, they have turned high yielding dividend shares as an option. As a flood of new investment has poured into the banking sector, shares prices have rallied which has in turn decreased dividend yields but increased capital appreciation. In parallel with this market activity the banking industry has moved to continuously increase dividends to keep dividend yields at an attractive rate. Today, Canadian banks are paying dividends which yield between 3.5-4.5% depending on the risk associated with the investment and time of entry. For example, an ideal time to open or build a position in an income-generating stock is during a market correction as yields offered can significantly improve.

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6361503495202288484316741

Toronto-Dominion: Positioned As North America’s Bank

Summary

An overview of TD’s successful acquisition strategy in America and Canadian history.

Unlike any other bank, TD offers its shareholders exposure to the entire North American banking industry.

Credit Suisse has increased their target price for TD.

The Canadian banking industry is widely accepted to be one of the safest banking networks in the world. It is characterized into two general categories, which are the “large five” and the smaller second-tier banks. The large five include Royal Bank of Canada (NYSE:RY), Toronto-Dominion Bank (NYSE:TD), The Bank of Nova Scotia (NYSE:BNS), Bank of Montreal (NYSE:BMO) and Canadian Imperial Bank of Commerce (NYSE:CM). The second or smaller-tier banks include companies such as National Bank of Canada (OTCPK:NTIOF), Canadian Western Bank (OTCPK:CBWBF) and Laurentian Bank of Canada (OTCPK:LRCDF). Unlike the tier-two Canadian banks, the large five are much more than Canadian banks, and would be better described as international financial conglomerates with a strong rooted foundation in the Canadian banking industry.

The Canadian, banks supported by a historically strong Canadian dollar, increasing profits, cash-rich and with the desire to expand outside of Canada, have spent the last decade on a wild shopping spree. Let’s focus specifically on Toronto-Dominion Bank of Canada, which is commonly referred to as TD Bank or simply TD. TD has spent the last decade assisting the consolidation of the American banking industry, and has emerged as a household brand in America. This is significant to observe, as TD is neither positioned more as a Canadian bank or an American bank; it would be best classified as a North American Bank.

Today in Canada, TD is the second-largest bank by market capitalization and based on assets. It offers a range of financial services and products to greater than 10 million Canadian customers through more than 1,200 branches, and is armed with 2,600 Green Machine ABMs. The current-day TD Bank dates back to 2000, when TD acquired Canada Trust. In recent years, TD has been moving away from the Canada Trust brand to simply TD Bank. TD Bank is the brand name in the USA, which indicates a shift to consolidate brands throughout North America possibly towards one TD Bank, N.A.

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0623td

Long-term strategic dividend investing:

Toronto-Dominion Bank: Canada’s Best Export

Summary

Since TD Bank’s more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S., and is now crowned as “America’s Most Convenient Bank.”

TD Bank has grown through a number of acquisitions that have led it to become a top 10 bank in the USA with significant retail.

TD is quickly becoming best-known as a U.S. bank with a strong dividend and steadily rising stock price. TD presents healthy exposure to the U.S. banking industry.

Since Toronto-Dominion Bank’s (NYSE:TD) more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S. by maintaining and focusing on the highly customer-driven strategies, which have been the core focus in Canada. The philosophy, which was adapted from its Canadian retail operations, has allowed the bank to crown itself America’s Most Convenient Bank. While the Canadian banks have grown handsomely in the domestic markets, some have attempted to take on foreign markets, such as Bank of Nova Scotia (NYSE:BNS) and its efforts in developing nations. Bank of Montreal (NYSE:BMO), through acquisition, has increased its presence in America, but the efforts are still bearing non-significant rewards.

In 2004, TD Bank became the majority owner of the remaining Banknorth Group, and renamed it to “TD Banknorth, N.A.” Hudson United Bank, based in Mahwah, New Jersey, became a target for TD Bank and was absorbed in July 2005. This acquisition expanded TD Banknorth’s presence in New York and extended it into northern New Jersey and Philadelphia. As TD Bank moved into 2006, there was still appetite for acquisition, and the takeover of Financial Services Corp. was completed. This acquisition gave TD Bank additional exposure throughout New Jersey. In the fall of 2007, TD Bank and Commerce Bancorp of New Jersey announced that they had signed a definitive agreement for TD Bank to acquire Commerce Bank in a stock and cash transaction. The deal was valued at $8.5 billion. Advancing into 2010, TD Bank demonstrated that there was still room for ongoing acquisitions and bought The South Financial Group located in South Carolina. This would give TD Bank significant exposure along the Eastern side of America. In late 2010, TB Bank moved into the automotive finance market with the purchase of Chrysler Financial, which was later renamed to “TD Auto Finance.”

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