TransCanada Corporation: Initiating Coverage on TRP Calls

It’s another beautiful to day trade stock options and I am excited about the possibilities inherent in the options of TransCanada Corporation (USA) (NYSE:TRP). TransCanada Corporation with its market capitalization of $37.29B is a North American energy infrastructure company focused on natural gas pipelines, oil pipelines and energy. The company’s segments include natural gas pipelines, oil pipelines and energy.

Surging to New Highs

TRP stock chart

As the image above shows, shares of TransCanada surged 2.11% today to make a new 52-week high of $53.75 per share at around 1:56PM EDT. More interesting is the fact that the stock has made 5 new highs within the last one month and the stock is up 21.45% in the year-to-date.

Technical Reasons to Stay Bullish

Shares of TransCanada are trading high above there 20, 50 and 200-day moving averages and a Relative Strength Index (RSI) 73.33 suggests that the buying action is just starting out.  The company sports a P/E ratio of 24.00 and a dividend yield of 3.46%.

The stock also sports strong fundamentals as it expects revenue to grow by 17.40% this year and by another 2.50% next year. It also forecasts that its earnings will increase by 4.50% this year and by 9.40% in fiscal 2014. We can also expect earnings to increase by 14.75% over the course of the next five years.

Strong Financial Position

The predominantly bullish trend observed in shares of TransCanada over the course of the last one month can be traced to the strong second quarter (Q2 2014) results that the company delivered on July 31. The company reported growth across practically all its business segments as Russ Girling, President and C.E.O at TransCanada opines that “the majority of our business segments performed well over the course of the second quarter and demonstrate the benefits of a diversified and growing portfolio of critical energy infrastructure assets.”

Highlights of the Second Quarter Results are presented below:

  • Net income attributable to common shares of $416 million or $0.59 per share
  • Comparable earnings of $332 million or $0.47 per share
  • Comparable earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.2 billion
  • Funds generated from operations of $917 million
  • Declared a quarterly dividend of $0.48 per common share for the quarter ending September 30, 2014

Another reason to stay bullish on TRP calls is the scope and scale of recent projects completed by the company.  For instance, the company announced that it has invested some $2.4B in the Keystone XL project.

How to Trade TRP Options

I am bullish on TransCanada options and I strongly believe that that the company has what it takes to deliver growth and income to shareholders in the next couple of months. I recommend initiating a position in the TRP Jan 2015 55.000 call (TRP150117C00055000) options at an asking price of $1.60 per contract. The contract is already up an impressive 33.93% today as at 2:31PM EDT and we can expect the bullish momentum to continue over the next couple of months.

— Daily Option Alerts

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