TC Energy (TRP.TO)

Chart shows a very nice move in July. Loves the pipelines. This pipeline has the one issue of Keystone in front of it. Obviously the news has been good recently. It could be temporarily a little overbought. The bigger picture on the pipelines is still pretty good.

He would buy this under $48 and sell at about $57. Has been the unfortunate victim of a political hot potato, but you have to look out to 2017-2018, if 1) the Eastern asset comes on-line and 2) they can build out their West Coast LNG. Has exposure in Mexico to the infrastructure space. Have very large projects that are long dated.

Chart showed an upward growth channel from 2012, with the stock currently being at the top of the channel. If you are a trader, you want to reduce at the top of the channel and acquire at the bottom of the channel. However, if you are a long-term investor, you stay with the trend and Hold.

When the US shifts the flow of oil from North to South and South to East, that is going to transfer about 1 million barrels a day, which will be quite accretive. 3.7% yield.

What matters is the general direction of energy infrastructure in North America. When they first came out with the Keystone XL approval it was a $1-$10 billion project they were going to build. They’ve already built the southern leg from Houston to the Gulf coast. Now they have almost $35 billion in projects on the books, and Keystone is only $5 billion of that. This company has $12 billion of LNG gas pipelines contracted in BC alone. Yield of 3.82%.

Took quite a hit when Keystone got cancelled. In the meantime, he feels the company has discounted that. They have all sorts of other irons in the fire. This is utility with a good dividend, and he sees continued growth.

Preferreds. Was trading about its call price last year, then we had the interest rate spike and it traded down. It has a call date a year from now. Interest rates have to go down about 100 basis points in order for this share to get called. It resets every 5 years, but he is not sure how much higher interest rates will be next year. He expects the yield to be 2.9% next year instead of the 4.75 this year.

(A Top Pick March 15/13. Up 4.01%.) Preferred 4% Series 7. Has held its value fairly well. Most people would expect that it is going to be called.

Doesn’t think they are as dependent or hopeful about the KXL pipeline as they would have been 4 or 5 years ago. If that does come through, that will certainly be good for the stock. They continually add to and improve their base of assets and are the primary pipeline facility through Canada. Currently selling at 20X current year’s expected earnings which is fairly expensive. Yield of about 3.8%.

Just reported. Getting closer to full value at this time. Thinks returns are in the high single digits. If it were to run another $3, he would probably Sell his holdings.

Owned for quite a while because of the promise of Keystone, which is a disappointment, but in the meantime they came up with lots of other promising projects, so he still likes it. The market is not ascribing much value to keystone. If it comes through it is a nice bonus.

Even without Keystone, they have tremendous growth. If you include Keystone, they have $30 billion of secured projects over the next 5 years. Believes they will grow their earnings by at least 7% a year. Also, the dividend should be increasing at least 5% year if not higher.

When you get as big as this, you have to take on larger and larger projects to move the dial. Keystone project has been delayed for quite a long time. The industry has now reworked itself so it is not dependent on this. She prefers smaller companies that are just operating in one province.

They have a pipeline already that is improving deliverability into the Gulf. They have $30 billion worth of potential expansion. Nice stable revenue stream. 4% yield, which is growing.

Which pipeline company would you pick for a long-term hold? All his clients own TransCanada Corp (TRP-T) and some also own Enbridge (ENB-T). Enbridge has been the better performer in recent years. TransCanada has been hurt by the uncertainty over the Keystone XL. Because of its other projects and its got investments in the electricity business, TransCanada is a good long-term hold. Both of them are worth continuing to hold.