TC Energy (TRP.TO)

This company can afford a lot of debt, because they have very, very stable cash flows. Regardless of the price of a commodity, it still needs to be transported. Yield of about 5% is not bad, but not super attractive.

A lot of these pipelines are going to be very much a first derivative on your view of the commodity price. Their balance sheet is fine and it is not a bad entry point.

Technials are not looking that good as it is in a downtrend, and underperforming the market. It is trending down and momentum indicators don’t look good. It is normally seasonally strong from end of Jan until May. Technicals do not support the trade right now. Look at it at the end of January for bottoming and forming a base.

Just sold his holdings in the $49 area. Feels it is still too early to get back in. They still have too many projects with question marks over their futures. He wonders where the earnings growth is going to come from.

Prefers to ENB-T even if the latter was the glamour kid. He likes stocks that are slightly less favoured. TRP-T are building pipelines in Mexico. 8-10% dividend growth out to 2020. They bought some Nat. gas powered power plants recently. 4.8% dividend. Buy Canada even though you partially diversify outside of it.

Prefers Enbridge (ENB-T). Hadn’t expected Keystone was going to be approved. Feels there is more visibility in Enbridge’s growth profile going forward. Their projects are in place and secured by long-term contracts and the dividend and earnings growth will be greater. If crude stays at these depressed levels for a long period of time, there is no doubt that in the next 3-4 years growth will slow for all pipelines.

The company has said they are going to raise their dividend 8%-10% per year to 2020 every single year. Thinks all the bad news is now reflected in the stock price and would be patient, holding and buying the stock at this price.

A high-quality name and he believes the dividend is safe. Everything that happened with Keystone has put a lot of pressure on the stock price. If you are a long-term shareholder, you have done quite well. This is a great time to be buying now. Well-run company. The dividend is safe.

Pipelines are a good derivative investment on energy. TRP-T is more realistically priced here. Oil will always need to be shipped no matter how low the price gets, maybe more of it in fact. There is still the energy east pipeline even though Keystone is dead.

A very interesting time to be looking at this. He had a small exposure, but it has now caught his eye. It is basically hovering around its 52 week low and has a 5% dividend. Trading at about 15X multiple, which is fairly reasonable in this industry. ROE on these companies has never been really high but a lot of their contracts are long term and take or pay. They are not given credit for their other opportunities to expand their base. Thinks they will be spending a lot of their money over the next few years in other expansions.

All the pipelines have been struggling as oil prices stayed lower for longer. Valuations were quite high, but down here it is getting a little more attractive. You have to think that we must be getting through some of the bottoming process in energy prices. If so, these assets are worth a ton of money and they generate a lot of cash flow. This company has a lot of growth projects. He likes the name.

Pipelines overall pay really good dividends and so are more highly valued now than historically. As rates increase you may see these underperform. He is not sure there is a lot of growth potential. The dividend is quality without risk. XL was never going to happen.

How much does this political wrangling impact this company’s value? He is modelling this company as not having the big energy products go through. Without Keystone and without Energy East he still sees 4.2% cash flow per share growth and 8.2% dividend growth. Trading cheaper than its peer group average at around 24X, so it is a name that is relatively viable here. As long as oil is in the penalty box, you are not going to have an easy time with pipelines. However, this one is pretty defensive and is a bond yield alternative.

Have just asked for a postponement of the verdict on Keystone. Earnings which were a little better than analysts were expecting. This is a company that can solidly generate earnings per share and earnings per share growth on a continual basis. Lots of pipelines are being built and there are lots of ways to move gas and oil, and this company is in there.

He would like to see how the Energy East story starts to unfold. If it starts to work, then you could buy this.