Opinions
Ross Healy
Altagas Ltd
ALA-T
COMMENT
Jan 19, 2018
Stock price when the opinion was issued
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Shares have nearly tripled from their bottom a few years ago. Their cross-border exposure benefit further from the strong USD and is often reflected in their strong Q3s and Q4s. He expects outperformance on currency alone as they advance their midstream projects on the west coast.
(Analysts’ price target is $38.78)Excellent opportunity for rising gas prices. Believes demand for transition fuel will continue to rise. A.I. demands for power generation will increase natural gas demand. A.I. data centers requiring more power than can be provided. Excellent dividend yield with new projects on the West Cost. Good for long term investors.
A place to hide, even if tariffs go on. Great growth in utilities and mid-stream. Increased dividend. Outlook for nat gas is very strong. Earnings come out around March 7. Growing about 11%, trades at 12x. A 10% tariff would impact sentiment across the board, but not its business as much. Yield is 3.6%.
(Analysts’ price target is $38.44)Problem with the chart is that it's arcing up, making a sharp angle up. Sharp angles up almost always correct, by a little bit or a lot. The trend's been in place long enough that it will probably correct just to the trendline, around $35 or so. As long as it didn't crack $35, he'd continue to own.
Place to hide that's somewhat immune from tariffs. High growth in both utilities and midstream. Q4 announced the next wave of growth projects to the end of the decade. Increased propane sales, expansion of the North. Decent yield of 3.2%, grows 5% a year.
Stock's had a move, but still a discounted valuation at under 14x.
Half utility, half gas processing. Both segments doing well. Utility side rate base is growing 8%, which is higher than others. Working on large propane export projects off the West Coast. A lot of gas producers are looking for capacity outside the US; Asian markets, for example, have higher pricing. Yield is 3.16%.
(Analysts’ price target is $39.50)You always have to be putting new $$ to work. If you're at your asset allocation on equities, you don't need to add.
But if building a portfolio, this name is pretty defensive with good upside. Actually benefits from tariff noise as producers look to diversify export markets. Gaining new contracts. Utility business doing really well on data centres. Great combination of offshore gas and onshore data centres.
At 16x, trades cheaper than peers; growing around 10%. 3.1% dividend yield, which is growing nicely.
Pembina Pipeline (PPL-T) or AltaGas (ALA-T)? He doesn't particularly care for one over the other. In terms of safety, he would probably prefer Pembina, although the yield isn't as good. This one has a dividend that isn't covered, and increasingly you are getting oil/gas companies that are cleaning up their act to get their financials under control, cutting the dividends tends to be high on the list of things to do. Looking at their balance sheet, that would be a good thing for this company to do.