Pembina Pipeline Corp (PPL.TO)

Pipelines have been a weird place to be, but this is one of the strong ones. From 2014 to 2016, it had a big downtrend, but was followed by a nice upswing. The trend had a bit of a break a few months back, where the market was wondering if the value had been fully realized. For the next 6 months if we have a pro-growth rally going in other areas, it doesn't mean you are not going to find valuations that are out of whack. Prefers Inter Pipeline (IPL-T), which has been beaten up a little more and has a higher yield. He would like to see this one hold just below the $40 range. Below that, we are actually looking at capital erosion.

One of the local companies in Alberts that gathers oil from the bigger guys. He likes this as well as Inter Pipeline (IPL-T). A utility that’s in a non-political situation in Alberta, and they don’t have to worry about building a pipeline. Good dividend. Has some growth potential.

In the midstream gas space. Recently completed an acquisition of Veresen which has increased their capacity and increased their potential for future growth. Most of the pipelines have come down in the last couple of weeks. Expects there will be growth opportunities over the next few years. Dividend yield of over 5%. (Analysts’ price target is $50.)

He sees their acquisition of Veresen very favorably and thinks that it really extends their base to grow earnings. He would consider taking a closer look, but still thinks none of the pipeline companies are cheap right now.

He does not own pipes right now. This is a good one and if he had to own one it would be in the top group. The risk is simply that the energy markets are not attracting any cash flows. You are fine to collect the dividend of 5.2%.

Closed at $42.91, and he has a model price of $53.25, a 24% premium over the current price. If it got $39.51, it would be interesting. Remember that in the 1^st part of 2016, the stock was basically down to about $27. It’s had a good recovery. Feels that a lot of interest sensitive stocks are meeting a lot of competition as interest rates move higher.

In the infrastructure industry. She likes the Veresen acquisition, located in the Montney region in Alberta and BC, which closed earlier this month. A very low-cost region where producers can make a reasonable return even at these low prices. The company is well positioned to service that area. Veresen also presents more longer-term opportunities, such as Jordan Cove. This is more for the income investor. Dividend yield of 5%, which she expects could be increased. (Analysts’ price target is $50.)

If there is a down day for oil, that is going to be a downer for this, because it is storage and pipelines. The big problem in Alberta is that there is nowhere to send by pipeline, because all the pipelines are being held up. This is one of the better providers for storage and pipelines. Their balance sheet is decent. They’ve been making acquisitions that have been improving their revenues over time. Free cash flow has been stagnant, but then it is basically a quasi utility anyways. Dividend growth is 7% and CapX is up 53%.

He recently purchased more shares, just before the merger was completed. The dividend increases is what is more exciting for him. There was a 12.5% dividend increase this year. A really well run-company, great assets in the Montney and the future is pretty bright.

Inter Pipeline (IPL-T) or Pembina Pipeline (PPL-T)? Local carriers in Alberta, Saskatchewan and BC. They take oil from various oil sands, do some treating, with some storage. They are local utility providers on the pipeline side. Don’t have the political problems of getting through province to province to province. He likes the business they are in. The reason he likes Inter Pipeline is that it yields 7%. This one yields 5%. Either one is a good investment.

Trading at its fair market value, so he doesn’t see any upside potential.

With weak energy prices, it is hard to get excited about anything in energy. Prefers pipelines where the fundamentals don’t really matter that much if oil is $50 or $100, the stuff has to be moved. In the process of acquiring Veresen (VSN-T), and if it goes through, they are promising a dividend hike. Has a great track record of raising dividends. A good business to be in. If interest rates continue to stay low, you can’t do worse than holding a stock that has a 4% plus dividend.

A little less oiler than IPL-T. They are working on the close of the VSN-T acquisition. It will ensure 5 years of growth on existing pipelines. (Analysts’ target: $50.00).

(Top Pick Jun 23/16, Up 8.60%) The dividend will grow over the years. It had an earnings miss, but the acquisition of VET-T will help them. He continues to hold it.

He added to it a couple of months ago. It has come off like the others. He likes it as well as the VSN-T acquisition. They still have a number of projects that are coming through and the expansion to the States so he is sticking with it.