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

BUY

Likes the company and they have good yield. There’s no political risk since it’s in BC and Alberta. It’s taking a risk by stepping into processing with the plastic plant but it should be a success.

BUY

He bought it a couple of years ago in anticipation of the plant they are building. It should add 35% to the value of the company and so he would consider it a buy.

TOP PICK

They're developing a $3-billion asset, chemical production from propane to create condensates. Also have a pipeline to the Oil Sands in a time of scarce pipelines. A boring investment. They'll do sales to reduce their leverage, which is a negative for IPL. He's long owned it. You get your 8% rate of return. Overall, Canadian pipeline progress is slow, but pipelines are progressing. TransMountain will happen. Oil by train is slower and more polluting. (Analysts’ price target is $24.06)

COMMENT

He prefers other pipelines. They have to operate perfectly for the next few years to . Canadians should own a pipeline. Prefers Enbridge, a fine operator with better dividend growth.

DON'T BUY

The dividend is far greater than its earnings. Part of the yield is return of capital. Model price is $22.12 or a 2% upside.

COMMENT

This will do well over time. They had some problems lately. They have a good capital program. Their chemical plant will be a positive. The valuation prevents him from adding to his position, but he'd buy if this pulled back 20%.

COMMENT

It's been down but that could be a signal of some sort. Look at its peers, like Pembina or Keyera (which he owns). If those are stable in comparision, then maybe the market is trying to say something. IPL's dividend is 50% higher than the market, which could be a signal.

COMMENT

IPL vs ENB? IPL is really a Western Canadian story with a 7.7% yield, whereas ENB is a North American play. IPL is building a petrochem plant, which is going to require a lot of debt. He thinks investors were upset with the take-over bid as they never were given a chance to vote on it. At this price level, he likes it. He prefers KEY.

COMMENT

There have been talks about a takeover or a sell-off of a section of their business. However, there has been delays with NGL processing. The growth rate of the dividend is negligible. A lot of capital expenditure that will be completed in the next couple years.

BUY

The recent pullback in the share price makes it worth looking at. Informed corporate buyers see a value, deducing from the purchase offer.

TOP PICK

The heartland petro chemical complex is the biggest thing to come. It has never been done before in Western Canada. When this works, you will see a considerable re-rating of this stock. The 8% dividend is safe. (Analysts’ price target is $24.19)

PARTIAL BUY

He owned it for quite a while and did a drip on it. $21.50 is the support. There could be a leg down below that to $20. He thinks the downtrend might be starting to turn, however. Buy half a position and then buy the other half if it gets weaker.

COMMENT

Safe dividend? Yes. The big issue is they're building a $3.5 billion plant that processes nat. gas into plastic, but can their balance sheet support this expansion. Also, pipelines are a big part of their business, and it's no surprise about pipeline woes in Canada. The chart is making higher highs and higher lows, and they're selling non-core assets in Europe to shore up the balance sheet. The worst is behind them. This new plant should add 40% to their EBITDA.

COMMENT

She owns pipelines, ENB and Pembina (better growth), but not IPL.

DON'T BUY

It was his largest holding for many years, but he didn't count on that route from north Alberta being blocked off. IPL has sold some assets. He now owns some Pembina and Keyera. IPL is a little risky until the fate of the oil sands is decided; if that oil doesn't get to market, then IPL is vulnerable.

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Inter Pipeline (IPL.TO)