Inter Pipeline (IPL.TO)

A mid-stream company and services the energy industry with existing capacity. Generally not as exposed to the energy cycle as oil companies are, but more exposed than Enbridge (ENB-T) and TransCanada (TRP-T). Just sold his TransCanada as he feels interest rates sooner or later are going to go up and it could be vulnerable. Doesn’t see the dividend not being safe, but as far as making any money on the stock in the near term, he doesn’t see it.

The kind of company that will keep you well in the money for a long time. Pays a nice yield and is in a decent growthier area. Reasonably priced. Doesn’t think you will go overly wrong on this. (See Top Picks.)

Has just been caught in the downdraft of the oil stocks. It is like a semi-utility and the actual need for their services is going to stretch years down the road. Maybe in 4-5 years, the potential growth may go out of it. In the meantime, the dividend is quite safe. Reduced his position in the pipeline sector because he thinks the long-term growth prospects aren’t as strong as they used to be.

It is fine. There is a base wedge of oil sands production that is not going to go away. But the question is how much growth can happen in this area over the next 10 years. You might want to diversify.

Even though this is a service pipe company it is oil related. It is weak, but not as weak as the pure producers. Of the pipelines, this one is very oily, which is a negative right now. Dividend is safe. You could probably buy this cheaper a month from now.

This has been a great place to be for a long time, but has been punished by being in Alberta. The whole energy infrastructure space had a real expansion in multiples because it is one of the few areas where you can see a sort of 5 year path of growth built into it. Because capital spending has come down, that has been called into question. This company does a lot with the oil sands and they are still going to produce because they are a cash crop and are even below oil prices of today. There is a compression in its multiple and that is probably going to continue. He wouldn’t want too much of this in his portfolio, as it is going to be held hostage to oil prices.

Will look a lot like some of the defensive names. It has the energy element to it. It had a long slow downtrend. It had a December low which made a “hammer”and flushed out a lot of people. Coming back right now to revisit that low. Feels that there are lots in this space which are really good risks. (ie. IPL-T, TRP-T)

He is Short this stock. He is also Short Enbridge (ENB-T) and would not be enthusiastic for any other midstream pipeline company. A very expensive stock, trading at 27X earnings. Over the past 4 years, earnings have not mattered; it has been dividends that have mattered. This company has done a wonderful job of raising dividends, raising capital and reinvesting, but have done it in a very low interest rate environment. As interest rates go up, the leverage that they have in that earnings stream and on the balance sheet is going to start to affect earnings.

Doesn’t own this, but does own Altagas (ALA-T) and Pembina (PPL-T) which have performed much the same. They are all in midstream assets, and have exposure to energy through frac spreads, etc. The core of their businesses is either cost of service or fee for cost, etc. He thinks all 3 of these companies will do pretty well as long as oil comes back at some point in the next 2-3 years.

It has been in a trading range for 8 months. There is no technical indication of changing this trend. You can hold it for the dividend.

Stock vs. Stock. KEY-T vs. IPL-T. IPL-T just moves gas from here to there, and doesn’t add much value. With the new government in Alberta, maybe they won’t build any more pipelines. Prefers KEY-T.

Not his preferred midstream energy play right now. A lot of these energy infrastructure companies have made money hand over fist as there has been a significant increase in oil/gas production during the last 5 years. A lot of the cash flow growth is contracted. The question for a lot of these names is, what is the growth going to look like beyond 2018. The other big risk is interest rates. If you have a long-term time horizon and can stomach some commodity price volatility, this is providing a pretty decent entry point.

(Top Pick May 20/14, Down 0.78%) It is down in sympathy. He is a roaring bull, but would not buy this until things settled down in the sector.

He sees this growing at 12% over the next couple of years in EPS. Trading at around 24X 2016 estimates. They are developing their Cold Lake and Polaris which is good, but they haven’t announced any new connections in the last couple of quarters. That has been a bit of a negative for the stock. He would prefer Enbridge (ENB-T) and Pembina Pipeline (PPL-T).

None of the pipelines look particularly cheap. They are building out their infrastructure such that their underlying asset base is increasing and the returns should increase along with that growth. You are being paid a 5% yield, which is quite generous. He sees a little more capital appreciation than he does in the other pipelines. This would be his favourite at the moment.