Stockchase Insights Pembina Pipeline Corp PPL-T BUY ON WEAKNESS Nov 06, 2024

Surprised by underperformance. If he could pick it as a Top Pick again today, he would. Re-contracting of tolls on Alliance Pipeline bought from ENB was worse than expected. Really well positioned for increase in nat gas production in Western Canada. Continues to buy.

About 70% of the business is take-or-pay -- no volume risk or commodity price risk. Another 20% is on fee-for-service contracts, where there is volume risk but no commodity exposure. Rest has commodity exposure to nat gas and oil. 

Over 10 years, has been competitive with the TSX. Compounding total shareholder returns just over 10%. A bit better than its energy infrastructure peers. Beta is about 0.7, low risk. Trading at low end of the range. Yield ~5.4%, and growing at a 5% pace for foreseeable future. Good sightline to high-single or low-double-digit return.

Head-scratcher as to why it hasn't moved along with TRP and ENB. Perhaps because those 2 names are the biggies where $$ flocks to in the sector. Unparalleled strategic positioning for nat gas and oil infrastructure in Canada. 80% of cashflows are contracted fee-for-service, and this funds the dividend. Good capital appreciation plus dividend growth.


Cloud on new contracted price for Alliance Pipeline was overblown by analysts, impact is minimal going forward. Cedar LNG and other levers for growth. Yield is 5.50%, and growing ~3% a year.

Worries over tolling on one of their pipelines has pressure PPL, but are well-positioned for future growth in energy infrastructure where more spending in pipelines looks likely. The dividend is safe. Has a low valuation and pays a decent dividend, though in the penalty box now. Stick with it. Good to buy now cheap.

Likes the technical picture. Trended up, and has been going sideways. A break above that (expects it later in the fall) is quite positive. Right space, which has been beaten up a bit. Good risk/reward plus a nice dividend. 

If it breaks below the lower channel, then something's wrong with the story and you wouldn't add more. Yield is 5.24%.

Chart shows an emerging downtrend. Support around $49.50. Hard to say if range-bound between $49.50 and $58.50, though it is creeping up toward the high end. He'd want to see it break out above $56-57, or at least take out the previous high so you're not in the trend of lower highs anymore.

Owns pipelines and midstream assets (where nat gas goes through, and they clean it up and send it out). Good growth projects on the West Coast with, potentially, Cedar LNG. Likes it a lot. Good dividend, which grows. Good balance sheet. Core holding.

Likes and owns both. If she had to buy one today, it would be PPL. ENB has already seen growth. PPL lagged for a lot of this year, flat to negative, up until last week with Alberta data centre announcement. Strong management and strong track record.

He's been cautious on the pipes. The pipeline ETF in the US is hitting RSI new lows for the year, as are a lot of the pipes in Canada (including the best-performing one, ENB, which he owns). Fine for yield.

People looking at long-life, more-utility-type assets are focusing more on electrical power generation. In that camp, you might look at CPX.

Complementary to ARX -- it's more of a producer with some infrastructure, whereas PPL is almost 100% infrastructure. Temporarily ran up on news about working with META. Now KKR is selling its minority stake in a JV with PPL, but concern is that PPL is the one who's going to buy it (to the tune of $5-7B). 

He doesn't really care. Company's really well positioned for future LNG in 2027, has great amount of gas processing all throughout the Basin. Power demand from nat gas is on the rise. He continues to buy at full weights in all client accounts. Yield is 5.33%.