Emera Inc (EMA.TO)

(Past Top Pick Nov.1, 2017, Down 14%) A long-term stock for him. They've done well expanding into the U.S. It has sold off because utilities are interest-rate sensitiive, and their guidance has called for lower dividend growth from 8% to 5%--and this is a dividend stock. Not oversold. He continues to buy this.

This stock is very close to its usual long term low. This utility tends to bottom as the market is topping. He does not think it has stopped falling yet and thinks it has another 8-10% downside yet to go. He would suggest holding if you already have it.

Emera vs. Fortis Emera doesn't have enough capital to fulfill its growth plans, so they need to raise it while they pay a 5.6% dividend--difficult. He prefers Fortis, which is better capitalized with better growth prospects. But they're both slow growers, not super-accretive. For dividend growth, look to a Canadian bank instead. Dividends: 5.6% vs. 3.9%

It is a short for him. It has a good yield but struggles in a rising rate interest environment.

These interest sensitives in Canada he not very bullish on. It has a model price of $34.68 so it is 15% overvalued. He thinks the BOC will have one more hike in them. He is neutral to negative on this one.

A lot of these utilities have had a tough go in 2018. The high dividend payers came down. Things are going well. Debt levels are a concern, however, with rising rates. They need to pay down the debt rather than raising the dividend in these times.

Utilities typically do well over the summer. The US utilities all did well this summer. But are now in an overbought position. The Canadian utilities did not have a good summer. Now seems to be consolidating. If you like the dividend, he would continue to hold during this consolidation period.

Fortis vs. Emera. Emera has more diversified assets. In a rising interest rate environment, who can grow their top line? It appears to be Emera. Because of growth profile and underlying assets.

He likes it. It has sold off more than some of its peers. It is a product of interest sensitive names selling off and they revised downward their dividend growth projection. It is not a game changer and you could still be a buyer here.

Will do well on dividend for a long term hold. He has not been going to the utility sector. Balance sheets are pretty tough. Nothing wrong with the company, just in a sector that is going to have a headwind for a number of years.

This name is caught in the same wave as all the other utilities. Probably has some value if we see interest rate hikes coming to an end and should see the bond market stabilize. Should be careful in this space. He likes this space and valuations right now.

It should be rising this time of year. It's just returned to the February low of $40. Now is a good risk-reward entry point. Seasonality is supposed to start in early-July. If it falls below $40, then it's showing weakness, which is due to rising interest rates. Generally, Canadian utilities are underperforming vs. US utilities.