TransCanada Corp. (NYSE:TRP) — This infrastructure company focuses mainly on natural gas, oil pipelines and energy. It is the primary developer and manager of the Keystone Pipeline System, and it is the company that manages non-regulated facilities in Alberta, Canada.
In January 2012, the U.S. State Department rejected TRP’s application to build the Keystone XL pipeline, which would carry heavy crude from the Alberta oil sands and Bakken Shale to Gulf of Mexico refiners. Since the pressure was high to construct the line, on April 18, the Trade of the Day suggested buying the stock at the market, which opened at $43.60.
On Friday, the State Department released an environmental assessment of TransCanada’s new plan of moving the line west, concluding that the pipeline would “not be any more of a threat to the environment than other modes of transport.” This is interpreted as clearing a major hurdle for the line and puts the issue back into the lap of the president for approval.
Despite the new report, the Obama Administration is receiving pressure from environmental groups to block the new line. But they are also getting pressure from Canada, the unions, energy companies, and the public to build it.
Investors who bought the stock at $43.60 could cash in now for a gain of over 10% ($2.94 capital appreciation + $1.76 dividend). However, if the project is approved by President Obama, the stock could have substantial appreciation. TRP is trading in a well-defined bull channel with support at $46 and resistance at $51. For new buyers or those who decide to hold, a stop-loss order should be placed under the 200-day moving average at $45.17.