Stockchase Opinions

Nick Majendie Fortis Inc. FTS-T COMMENT Sep 19, 2017

He likes this very much. They’ve done a great job in making acquisitions in the US. This is one of the dividend aristocrats of Canada. Thinks they’ve increased dividends 42 years in a row. It is not all that expensive, and is a great, long term investment.

$44.530

Stock price when the opinion was issued

electrical utilities
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DON'T BUY

It has strong resistance at $63 and is pulling back. It has a floor of $58 and could bounce there. Stronger support is at $55, but if it breaks that, it could fall to the next support at $42.

DON'T BUY
FTS vs. EMA

EMA is his choice. Bumps along the road, but the price has appreciated. Rates coming down have helped EMA's profit. Over time, expectation is that EMA will be the better choice over FTS. 

BUY

Consistent and reliable. A quality utility, which are generally safe and slow.

PARTIAL BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Analysts tend to be conservative. It is a pretty solid, high-paying job, and they do not get much benefit from 'sticking their neck out' versus the crowd. Target prices and recommendations tend to be similar. They do not get fired if 'everyone else was also wrong' but if they are an outlier then their calls are more closely scrutinized. AT 19X earnings FTS still looks OK to us, and its positive momentum in a bad market we think is a strong sign as well. But, it is up 28% in a year, and we would not expect those types of returns on a regular basis. It is still a relatively slow-growth utility company. 
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WAIT
At 52-week high, safe haven from Trump's antics?

Everybody's been crowding into what's been working. Bond proxy, not too challenged by Trump tariffs. Great long-term compounder. Raises dividend every year, by ~5%. Good long-term growth. Q4 beat. Steady player, without all the ups and downs.

One knock is that it's only growing 5%, but trading at 17x. So, no, don't buy at this level. In the space it's time to look at AQN again (believe it or not), GEI, or ALA.

HOLD

She likes this name, mainly because of its geographic diversification. Also has more US utilities than peers, growing just a little bit faster.

SELL

Great company. Has raised dividend forever, but dividend growth is slow at only 3-4% a year. Fine for the dividend. But for dividend and growth he'd lean toward a large-cap resource producer generating tons of cash, which would give much better inflation protection. Or go with a bank (such as JPM or a Canadian bank).

PAST TOP PICK
(A Top Pick Jun 18/24, Up 27%)

Today, this would be a hold. Currently above his buy price, wait for a pullback for new $$. People ran toward defensive names recently. Yield is 3.8%.

TOP PICK

Good long-term hold for income. Regulated natural gas and electric utility. Over 1/2 of revenues come from the US. Diversified. Very defensible and visible cashflow stream because it's regulated. Increased dividend for 51 consecutive years. In regions where data centres are being built. Yield is 3.81%.

(Analysts’ price target is $67.50)
BUY ON WEAKNESS
Dividend choice for an 18-year-old to hold forever.

Young investors don't care as much about dividend stocks, but they're really important. It's like collecting rent, instead of making money only once you sell a stock. The earlier they start, the more they reap the benefit of the compounding effect that takes place after 10, 20, 30 years of investing. Compounding is such a powerful tool.

It's hard to pick just one, as she likes a diversified portfolio. This name would be her second choice, after CNQ, because it's a little expensive right now. Stable utility growing 5-7% a year. Try to get it at a better price. Longest track record in Canada of dividend increases. Diversified jurisdictions. Increase in power demand is growing exponentially. Gives you exposure to AI but in a safer way, by owning the companies that produce the power.