Opinions
The Panic-Proof Portfolio (Stockchase Research)
Brookfield Infrastructure Partners
BIPC-T
PAST TOP PICK
Jul 23, 2024
Stock price when the opinion was issued
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Tax differences? For a Canadian investor, there really is not much difference between BIP.UN and BIPC. US investors face different issues regarding limited partnerships. It was a strategy by Brookfield to increase liquidity and it is why BIPC trades at a premium to BIP.UN -- it was also added to the Russell Index. If you are a Canadian investor, stay with BIP.UN as it has a higher yield.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The IPL deal has not yet closed but the bottom should be coming up. The stock is down 31% year to date. In a low interest rate environment, combined with the merger, investors should start paying attention again. Unlock Premium - Try 5i Free
The global infrastructure company has invested $2 billion into intermodal logistics and “hyperscale” data platforms, which it feels will benefit from 5G rollouts. It trades at 1.4x book and supports an excellent 32% ROE. We like that cash reserves are growing, while debt is aggressively retired. We recommend setting a stop at $38, looking to achieve $54 — upside potential of 18%. Yield 3.3%
We reiterate BIPC as a TOP PICK. The company has acquired 40 data centre sites, allowing it to exploit its utility expertise. It trades at 4x earnings and supports a robust ROE. We like that cash reserves are growing, while the company pays a reasonable dividend, backed by a payout ratio under 20% of cash flow. We recommend trailing up the stop (from $44) to $51, looking to achieve $65 -- upside potential of 18%. Yield 2.9%
Our PAST TOP PICK with BIPC has triggered its stop at $51. To remain disciplined we recommend covering the position at this time. When combined with our previous guidance, this will result in a net investment loss of 1%.
Our PAST TOP PICK with BIPC has achieved its target at $54. To remain disciplined, we recommend covering half the position at this time and maintaining the stop at $44.