Atlantic Power Could Be A Sell On Weaker Dollar (AT)

While the utility sector is often seen as a safe haven in times of trouble, a weaker dollar could wreak havoc on transmission provider Atlantic Power Corporation (NYSE: AT). All the company's power generation and distribution assets are located in the United States. The Canadian Loonies' bull run versus the greenback is especially hard on exporters that depend on the U.S. market for sales. To meet Canadian-dollar denominated debt and distribution obligations, the company does employ hedges, but even these can prove ineffective if the exchange rate continues to favour the strong Loonie.

So far, the U.S. dollar index is down over 7% in 2011 and shares of Atlantic have slid. While it remains to be seen if the company's juicy 7.5% yield will be cut due to the falling dollar, investors may want to shelve this one for awhile until lower share prices are hit. Atlantic's 52 week low is about $4 below the current share price.