EnerCare Inc (ECI.TO)

The dividend is safe. The stock has been under pressure from rising interest rates. He likes the business. The water heater business provides a good base. Their recent acquisition in the US has a challenge to convert sales into rentals to provide a recurring cash flow model. You have a sustainable business and a pretty good business base.

The stock had been doing very well. It was a defensive type name. A lot of interest sensitive utility type names pulled back after the election. There is kind of a rotation out of these into more growth economically sensitive names. The drop provided a nice entry point for someone who wanted to have utilities in their portfolios.

(Market Call Minute.) He likes this and thinks it is going higher over the next year.

(A Top Pick Nov 3/15. Up 23.74%.) He still likes this. Expects there will be more upside in the name as time goes on. The balance sheet is relatively strong. They don’t have a lot of debt. They also completed a large acquisition of service experts HVAC rental, where they should ultimately be able to take that business which is predominantly in the US, and roll it out to Canada. They are also going to benefit from the sub-metering business which is growing quite significantly. Dividend yield of 5.1%.

He just sold it because it was over bought. It looks like a steady performer. It has not pulled back like other dividend payers. There is nothing that can help us from a technical perspective. You might want to watch it and if it comes back down to the $15 area then buy it.

Great company and a great chart. He has been modelling a 9% EBITDA growth over the next couple of years and that their debt levels come down from 3.1 to about 2.9 by the end of 2018. Some of the businesses they are getting into are pretty capital intensive, which is a bit of a problem. All in, it is a great company, but pretty expensive.

A good yield and a solid business that is growing. They have a metering system, and have gone into old apartments putting individual meters into each unit. As tenants move out, landlords can then charge electricity to new tenants. They also have a water heating business. A very good, fundamentally sound business. A little expensive, but you have to pay up for quality.

A pretty good looking chart. They did some key acquisitions. They shifted their focus from selling water heaters to renting them out. He likes the predictability to the cash flow. 35 times PE. He would not be surprised to see a pullback in the short term.

This meets his criteria. Their cash ROE is just short of 40%, and their ROE/PE metric is around 4, both very favourable metrics.

Has held this for a long time, and it has been a great core holding. Made a major acquisition of Service Experts. With the warm summer we have had, it has helped on the air conditioning front. A great, long term story. Nobody is giving any value to the sub-metering business which will provide long-term growth.

(Top Pick Jul 02/15, Up 38.81%) He is one of the largest shareholders. He thinks there is still significant upside as they recently completed a significant acquisition in HVAC.

In a long term uptrend, recently breaking to a new high, momentum indicator positive. Technically you have yourself a winner.

This is a consistent performer. The water heater business is very stable. Have recently moved into the HVAC business. Doesn’t think the street is giving any value to the sub-metering business, which is where growth comes from, both from cash flow and EBITDA.

The ROE is more than 20% for more than 3 years so meets his criteria. He prefers companies that are at or near all time highs for him to add to a position. He does not want overhead resistance.

(A Top Pick May 29/15. Up 19.65%.) Normally a pretty boring stock, but has had a fairly exciting year. Made a major acquisition to essentially bring the operational side of the business in-house, which is direct energy. Also, made a major acquisition of service experts about 2 months ago, which gives them some exposure into the US market, plus a greater percentage of their business is now heating and air-conditioning. Reasonably valued at 10X, and doesn’t know why it trades at a discount to the utilities sector. 5.6% dividend.