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

PAST TOP PICK

(A Top Pick Dec 10/18, Up 10%) Sentiment in the oil patch is so negative that companies are not being recognized for what they plan to do down the line. He has reduced purchases on this one. There are better places to invest. It is better to get out now.

TOP PICK

Huge capital spend, but the payoff could be really big. Getting paid to wait. Over the next 2 years, they'll get their funding. Yield is 7.61%. (Analysts’ price target is $25.09)

COMMENT

IPL vs MFI? Maple Leaf foods dividend is 2.2%, well below that of IPL. He has not assessed the MFI earnings miss announced today. He would want to see how things settle out -- three days to let it rebalance. IPL had a big jump about an month ago about a potential takeout bid. IPL has a solid dividend and they are diversifying into other activities and into new pipeline projects, which should allow dividend increases. He would favour IPL.

WATCH

He likes it. It is a good management team. They went ahead with a Polypropylene facility for making highly recyclable plastics. They are spending more than a billion dollars on this project but have not given enough information on off-take agreements. The market is not giving them credit for the full utilization of this facility. He thinks it will be successful, but needs more signs and more progress on the contracting side to get excited about the stock. The yield is sustainable – has doesn't have concerns.

BUY

Not a growth story. He has been investing the dividend into a synthetic DRIP. He sees resistance around $25 and support around $22. He likes the up trend forming for 2019 as a whole. This is a good place to buy. Yield 7.7%

COMMENT

Yields 8%, which is good for a pipeline given an uncertain pipeline backdrop. Their propane facility will come online in 2-3 years which will drive this stock, maybe up 30% for their cash flow and that should raise their dividend. It's on his radar.

BUY

This morning, he was looking at it. He likes it, but hasn't bought it yet. It's now consolidating after a long downtrend. It recently broke-out on a China deal announcement, but has fallen to a neckline--and entry point--around $20. He doubts there is much downside coming, so you can buy it now or very soon.

BUY

Produces quite a good yield. Operates in Alberta and BC. They're adding a significant chemical production process plant. Good for a longer term hold. There is good yield potential.

DON'T BUY

Seasonal strength of June - August is over. Recently it's fallen off a cliff. If it goes to the 200-day moving average, could be a good time to buy. Not on his list of go-to stocks over the next few months.

COMMENT

He gradually sold it years ago. It's a risk, because it's getting hard to get oil out of Alberta, given the lack of pipelines. He owns a little of it and still likes IPL a lot. How much support will Kenney get? Buy this only if you have a 3-year horizon. The 7.5% dividend is safe. The problem is people don't won't to touch fossil fuels, even good companies. Wait and see--reality may set in, meaning wouldn't it be better to ship our own oil than buy oil from places like Saudi Arabia.

DON'T BUY

We're in a secular bear market for commodities with investors shifting to pipelines. IPL has seen a long-term downtrend, so he prefers Transcanada and Enbridge which boast better charts.

TOP PICK

The petrochemical plant (now in year 2) is costing them several billion, but will add $500 million in free cash flow. (Analysts’ price target is $25.38)

DON'T BUY

When oil prices were recovering from a decade ago, this was a phenomenal holding, but after oil hit $100, it has persistently made lower lows and lower highs. He likes IPL-T $20 and lower. But he would not touch it here.

BUY

He has been buying it. They are building a large petro chemical facility. It is a huge project that they went into without partners and so leveraged. There is a takeover offer but it is unlikely to happen. Their assets are desirable.

BUY ON WEAKNESS

It's recovered from a takeover rumour. It pays a nice 7% dividend. He targets $30, which is 20% higher. That said, the stock won't move up much unless the energy space does. Buy below $20 and take profits above $27.

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Inter Pipeline (IPL.TO)