Inter Pipeline (IPL.TO) Buy, Sell or Hold

Inter Pipeline (IPL.TO)

19.12

+0.28 (1.49%)

as of Nov 1, 2021, 8:00:00 pm Market Open.

714 watching

DON'T BUY

He sold it two years ago. They cut their dividend 70% in April which surprised many. A lot of their revenue was contracted and not so much exposed to oil prices. They were building a propane processing plant in Alberta, but this $4 billion project strained the balance sheet. The current dividend is sage, and he thinks in 2023 when the plant comes online IPL will recover. Until then, the stock won't move up much.

BUY ON WEAKNESS

An oil-sands transportation business, which also holds some storage assets in Europe. Its flagship business is a petrochemical facility in the Heartland region of Alberta. It trades at a discount to its peers, because the petrochemical plant brings uncertainty -- namely, they have not disclosed how much of the plant's capacity is contracted and there is no partner. It is a massive capital project. He does not own this. They have raised debt and cut the dividend 70%. He might be inclined to buy if it dropped another 15%.

DON'T BUY

IPL-T vs. ENB-T. IPL-T is a mid-carrier. It moves between facilities. ENB-T is international and moves between Canada and the US. ENB-T also owns a local gas utility in Southern Ontario. He owns ENB-T because it is a higher quality company and has bigger projects that are somewhat deferred due to environmental assessments. The dividend is stable and was not at risk.

PAST TOP PICK

(A Top Pick Jul 15/19, Down 33%) They are building the first modern petrochemical plant in Western Canada. They were progressing nicely, but the fear of the pandemic caused them to cut the dividends an circle the wagons. He feels the assets have not been impaired, plus the new plan is a 50% or more add to earnings. He thinks they are emerging okay.

DON'T BUY

She sold this a few years ago, when they reduced exposure in pipelines. They cut the dividend a few weeks ago. They are still funding a large new petrochemical facility and have not yet found a partner to move forward with. A large capex project will be questioned about how it will be funded going forward she thinks.

HOLD

They did this project to create polypropylene. Investors don’t like large projects when things become uncertain. He does not want to take any risks right now. They cut their dividend about 70% and that is factored into the price. He would not switch out of it. Pipelines are similar seasonally to oil but are strong longer. He'd be cautious after that. It may do okay for the next few weeks, however.

DON'T BUY

A lot of Canadian investors own it for the divined but you have to look at the total return. He prefers PPL-T and KEY-T. He is more focused on total return.

DON'T BUY

72% dividend cut? He would prefer holding other pipelines. IPL was in the midst of building a new plant and was caught by the downturn. Their pipeline assets are strong. He would look for safer pipeline names.

RISKY

He has been warning people about this. They pay more in dividends than their earnings. His EBV is $10. He thinks it will hang around there. If he had play money around then he would buy a little piece of it here, today. He thinks they cut the dividend too much. If he held it he would sell it.

WAIT

He loves pipelines as an asset for cash flow. The problem is the market sell off causing redemptions. This kind of liquidity crisis will allow yields to go up, but he thinks it is the time to be cautious and wait. He thinks the dividend is still safe.

DON'T BUY

15.4% dividend. It is 81% of trailing cash flow. He would be cautious because of the dividend.

BUY

Likes it. Good, solid business. Largest player in the business of transporting oil from the oilsands. New petrochemical facility, and people are concerned that it's outside the company's core business. It's a buy here.

BUY

The yield is at 7.9%. His strategy with pipelines is to play against the yield. They are basically monopolies. Anything that is built has good leverage. He trades to maintain cashflow. They are safe investments.

BUY

They tend to do well in this time period. You have the yield and the energy play. We have higher lows taking place. It is consolidating right now. He thinks it looks quire favourable.

HOLD

Owns ENB, TRP, and PPL instead. All doing well. IPL has a new chemical plant coming on. Pipelines are cheaper than utilities, with same growth potential. Yield is 7.7%.

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Inter Pipeline (IPL.TO)