EnerCare Inc (ECI.TO) Buy, Sell or Hold

EnerCare Inc (ECI.TO)

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COMMENT

Octavian Advisors, out of the US, own a good chunk of this company now and they continue to buy. At last year's AGM meeting they were a little more aggressive than he would've liked. They want a director on the board and the company is saying no. Expect there will be a lot of fireworks at this year's AGM. If they were to offer $15-$18 a share for the whole company, he would be willing to listen to this.

HOLD

There is a group in New York that has been buying a lot of this stock. He could see this stock in double digits. Some of the restraints they have to deal with are coming off so he can see them becoming more competitive. Great dividend.

PAST TOP PICK

(Top Pick Aug 17/10, Up 75.02%) Consumers Water Heater changed the name. Lovely dividend. Were badly beaten up. Could see them going double digit. Regulatory constraints come off next year. Pay you to wait.

HOLD

Bought this at around $3.50. Paid a beautiful distribution in the past and now pay a great dividend. Stock price has gone way up and he is still holding. In the past, a lot of their customers were dropping off so they slowed down the rate of attrition drastically. Thinks there is further capital appreciation.

PAST TOP PICK

(Top Pick Nov 17/09, Up 10.5% total return) Consumers Water Heater Bonds 6.75 4/30/2014. Sold to buy bonds further up the yield curve.

TOP PICK

Part of strategy to get instantaneous returns. Better than 100% upside. A lot of income trusts had payout ratios too high and were not sustainable. Consumers was one. Trust price has come way down. Now 50% payout ratio. They were loosing a lot of customers. He thinks they now have tremendous potential.

DON'T BUY

Has been a disappointing holding. Have had higher customer retention problems than anticipated. Earnings hadn't come through as expected. Current valuation is compelling but if it went over $5 he would consider selling his holdings.

COMMENT

He inherited a small bit through new accounts and has been reluctant to get rid of it as he perceives more value in the company than the current price is reflecting. Have suffered from higher costs and a fair amount of attrition in the customer base. More reasonable price would be $5.50, where he would sell.

DON'T BUY

(Market Call Minute) Terrible balance sheet.

HOLD

Not done too well, particularly against Just Energy (JE.UN-T). Erosion in their customer base through competition but seem to have stemmed that and come back a little. Expect distribution will be cut when they convert.

PARTIAL SELL

Been through trials and tribulations over the last couple of years. Big problem has been the ability of customers to walk away from contracts without penalty but is now very close to being resolved through legislation. Slowdown in housing has also been a problem. Consider taking some profits.

COMMENT

Generally likes the trust sector. Looks pretty decent on a short-term basis. Chart shows nice uptrend but will probably have a few points of upside resistance at about $5.80 and $6.70. 12.2% distribution. Hasn't participated like other trusts so if it broke down through he wouldn't want to hold.

HOLD

Has been buying this in the $3-$4 range recently. Feels it is worth $5 a share. 14% yield. Have to restructure some debt but if this occurs it could be a $6-$7 stock in a few years.

DON'T BUY

Not his favourite. European technology of coiled heated water has eliminated water heaters in Europe. It's only a matter of time before Canadians start converting. Long-term prospects are in question.

COMMENT

Debt has been an issue and they have refinanced this. A lot of competition. Tax loss selling will be finished in about 2 weeks so if you own, give it a bit more time for possible better pricing before selling.

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EnerCare Inc (ECI.TO)