Parkland Fuel Corp (PKI.TO)

Gas station and convenience stores operator. Its primary base has been in Western Canada, but are on the verge of a transformational deal. Alimentation Couche-Tard (ATD.B-T) is making a $4.5 billion acquisition of CST Brands (CST-N), and in order to allay the fears of the competition Bureau, Parkland is going to be buying a few hundred of the CST Brands Canadian stores. It looks like it is going to be about 13% accretive to earnings. His preferred way of playing convenience stores remains Alimentation Couche-Tard as it is larger and more geographically diverse with a better and more established management team. If you own this, he would Sell above $30. In the mid-$20, it looks more compelling. (See Top Picks)

He is short. Fuel retailing without refining margin is not a great business. He believes fuel volumes will decline. With their last few acquisitions they moved into more urbanized regions and they took on a lot of debt.

(A Top Pick Nov 14/16. Up 4.85%.) This has a 4% dividend, and he wouldn’t normally buy for his equity platform, but recently took a position because it seems to have broken out of a bit of a base. Even though it is an income stock, he feels it has a little bit of upside. He will probably sell it, but in the meantime, will earn a bit of a dividend.

He prefers ATD.B-T. PKI-T will benefit from a deal ATD.B-T. It is not his favourite.

A longer term pick: it was going sideways forever. It broke out and pulled back to the neckline ($28). You will collect a 4.1% dividend. Investment time horizon is one year or longer. (Analysts’ Target: $32.03).

This has been a great stock for his clients. Feels that it has a great future. It has grown by acquisition, mostly in the retail gasoline business. Earlier this year they bought Pioneer Fuels. Had a new stock issue, and he thinks it got ahead of itself with that. Feels it is still going to be good in the future.

It is only going to earn $0.82 and they are paying out $1.13. They can’t keep up with the dividend. He expects $22 or $17.80, so exit the position.

This has made some major acquisitions recently. They have been big acquisitions in terms of the number of storefronts, fuel depots and propane distributions. He is not surprised that the stock has been held back a little. If he saw it pull back to the $25 level, that would be an entry point.

Couche Tard bought CFP for multibillion dollars, and Parkland is buying their Canadian operations, so they are expanding their presence in Eastern Canada to match Western Canada. They are driving down costs and margins are going up. Not a cheap stock, but it consistently performs with a consistent cash flow. Dividend yield of 3.66%.

A fuel retailer involved in an acquisition. ATD.B-T will have to divest the Canadian part of an acquisition they just made and it will sell it to PKI-T. It is all subject to review.

They bought a piece of the gas stations from ATD.B-T. He owns ATD.B-T and it moved. PKI-T is pretty fully valued now unless it pulled back into the high $20s. At $33-$34 it is a sell.

(Market Call Minute.) Made a good acquisition, but the stock has had a huge move in the last month, and a bit pricey for him.

(Market Call Minute.) This has had tremendous appreciation, especially in the last few days. He is tempted to scale back at current levels.

Just acquired 500 Ultramar locations. That’s a great deal for them. There are big synergies in this business, and room for this to definitely move higher.

(Market Call Minute.) After its 15% move today, this would be a Hold or a Sell, because the move was too big.