SECURE Waste Infrastructure Corp. (SES.TO)

(A Top Pick July 5/16. Up 17%.) *LONG* (Pairs trade with a Short on Precision Drilling (PD-T). Took the trade off, but this is still a good company.

He likes the water treatment business. It is hard to replicate. The revenues are quite stable. As you get a recovery in drilling that business will ramp up also. They are almost the only game in town. It is possible they will increase the dividend at the end of the year. (Analysts’ Target: $12.06).

They will benefit from more activity in the oil patch. He likes the management team. It has a good balance sheet. It is one of his favourite names and he owns a lot of it.

She would Buy this if you have a 1-year outlook at least. It has a great business and there is a lot of torque to increasing activity in the basin. They do a lot of waste management. With oil prices increasing, she does think that this is the point in time when things are going to start to ramp up. It offers a lot of opportunity on the server side. A great management team. They have a pristine balance sheet. She can see lots and lots of upside.

*LONG* (Pairs trade with a Short on Precision Drilling (PD-T). (Top Pick July 5/16, Down 2%) It is a volume based business and is in better shape now as volumes are increasing. The balance sheet is in far better shape than PD-T’s.

A very well respected services company where a lot of people have been hiding to have service exposure, given that a lot of their revenue is a lot more secure. Feels you can do a lot better in other service areas such as pressure pumpers and frac sand companies. Dividend yield of 2.7%.

Secure Energy Services (SES-T) or Canadian Energy Services & Technology (CEU-T)? He is not really into the service names, but of these 2, this one has a 2.5% dividend yield, while Canadian Energy cut their dividend earlier this year and is only paying about .05%. If you are looking for dividend exposure, this would be the one. Service companies are going to struggle for an extended period, particularly if oil starts to come up like he thinks it might. The balance sheet on both companies are very well positioned, but you might just have to wait on this, and right now is not the time to be buying it.

About a $1.4 billion market cap. They do waste disposal for upstream oil/gas companies, and own a lot of landfills around Saskatchewan and Alberta. A great business to own for the longer-term. It is hard for competition to get in as there are barriers to entry. Because of that, there are only a few competitors, and it has a much better balance sheet than the others. They are growing a lot faster at a time when competitors are shrinking. You can see a lot of free cash flow being generated as more of their facilities come on line in the next few years. Dividend yield of 2.7% has a lot of room to rise.

(A Top Pick March 17/16. Down 0.55%.) In terms of the oilfield waste treatment business that they do in Western Canada, it is almost like an oligopoly where you have 3 companies. The other 2 companies are in real trouble in terms of their balance sheet. The company is well financed. Thinks this is relatively insensitive to the commodity price cycle.

*LONG* (Pairs trade with a Short on Precision Drilling (PD-T). A large provider of environmental reclamation cleanup services for the oil business. A very clean balance sheet with only 1.7X debt to EBITDA. This is a business that is required whether or not oil businesses are at $30 or $100.

(Market Call Minute.) A very well-run company, but given his view on oil, this would be a Sell. He is looking to Short this.

This stands out as a service company that you actually want to take a look at, particularly looking at the price decline. There is an interesting dynamic playing in Western Canada. They have 39 facilities that treat waste fluids from oil and gas. Inherently it should be a more stable cash flow stream, but does have a little bit of commodity price volatility. Recently got into drilling fluids as well. Just did a $130 million financing to pay down debt. With producers struggling, he thinks there is real opportunity for them to accretively buy assets and build out their footprint. There are 3 principal players, and he thinks this is the best of the 3. Dividend yield of 2.68%.

A service company in oil and gas, providing a fairly essential service for them. Oil/gas companies will continue to use this for emulsion treatments. This is one of the more defensible franchises out there, which is why it trades at a premium. Long-term this is a good company and is probably undervalued, but in the short term he expects the stock will go down because it is expensive.

It is just below where it was in 2013. What’s going on in the energy sector outweighs the seasonality of the stock.

Have 2 primary business lines. One that treats oilfield waste and one that sells chemicals/drilling fluids. He likes this one. They’re going to cut back their CapX a bit. Well-run company. Expanding in North Dakota.