Stock price when the opinion was issued
We now have a gateway to Asia. With tariffs, Canadian energy will not be welcome in the US. Integrated nature of its pipelines make it a long-term asset with growth capabilities that will reward shareholders well. Buy when it goes on sale, trim any gains. Good place to be, core holding for him.
Where will supply shift? This year, the Canadian E&Ps are outproducing all other international E&Ps, including Europe, US or Australia. He also bought ENB, which delivers the crude oil to the US. The US refiners have an insatiable need for Canadian oil. There's a 10% tariff on Canadian oil. Well, guess what--the Canadian oil companies are not eating the tariff, but rather the US refiners. If there's a shift in supply (given Mideast tensions), Canada will be able to supply that oil. US energy companies have a -12% earnings estimate this year vs. Canadian energy of only -0.20%
If the leading sectors in the market are those that would benefit from a more inflationary environment (financials, materials, industrials, some energy), and they are, you want to look at the groups that are not. Things that act like bonds (utilities, staples, REITs, pipelines) are underperforming.
It could be that people piled into defensives in April, but they just haven't performed. So with other groups that are economically sensitive performing, the defensive groups are being used as a source of cash. Great dividend, and that will grow mid-single digits. He'd rather be leaning towards hedging against inflation than disinflation (which is where a pipeline would come in).
It's hard for a non-expert to get a handle on how embedded energy infrastructure in NA really is. A lot of the oil coming from Canada into the US can't easily be replaced. Even if the US does produce a lot of oil itself, there are many factors to consider: where does it need to go, where does it need to be refined, and what grade is it. It's not like an on/off switch.
Largest oil pipeline operator in Canada. Pipelines are still the cheapest and fastest way to transport. Cheaper than rails. From what she understands, it doesn't seem that the pipelines themselves will be hit by tariffs. Recent move in the CAD would mitigate any tariff impact; even if not, the US depends on oil in this pipeline, so volume likely wouldn't be disrupted. Yield is 6%.