Westshore Terminals Inc. (WTE.TO)

The CEO, Jim Pattison, is one of the best Canadian investors. Believes he has been buying more of his own stock. This is not his kind of company right now as it is too expensive.

Large coal export facility in BC. Just cut their dividend because the coal business is in trouble. This rates pretty high in his ratings. It has a low PE. China does need our metallurgical coal, so they will utilize these terminals.

This is a coal tunnel for the Asian market. With China’s slowdown and suppliers, whose coal goes through the tunnel, cutting back because they can’t sell enough of it, it’s a problem. A well-run business and doesn’t have much competition. He feels they may end up cutting the payout.

They have done a really good job. It is the only export terminal operating. It is a yield name.

Good company. Reasonable yield and the dividend is safe. Stock price has slowed down because coal exports have slowed down. He believes that longer-term, metallurgical coal is a good business to be in.

(Top Pick Nov 05/13, Up 2.78%) Still likes it. Toll road like business. Nice dividend. A steady infrastructure business that someday a pension fund will want to buy. Coal prices have been under a lot of pressure, but these guys have fixed price contracts. Customers are committed to shipping a certain minimum volume and are big enough so won’t go out of business as coal prices go down.

The three-year chart shows a nice, long, upward trend. It has now dropped below this trend a little bit and he wonders if this is a trend change. MACD is reasonable. Relative strength and Stochastics indicators also look reasonable. There was a pretty sharp drop back in early October, but has gotten back above the moving averages, which is pretty positive. He would look at $31.50-$32 as your line in the sand.

It is very dependent on coal. A lot of governments are trying to reduce consumption of it. Not a lot of growth potential to it. There are better company income plays.

The key thing in looking at this is its main commodity, which is coal. Coal is going to be under considerable pressure. Obama is certain to come out with new stringent rules regarding the use of coal and the firing up of fire plants. (He thinks Obama will use this as a pretext for killing Keystone once and for all.)

One of the great things about this is that it has an unbelievable asset. It is going to be very hard to add another terminal like that on the West Coast. Thinks the stock got overvalued. Has also been hurt by what has happened in China which has affected a lot of resource companies over the last little while, especially in coal. He would look to buy this on a pull back.

Exposed to Met Coal sector. They had a great run but this market is highly reliant on China so there is downside risk that if China ever decides they built enough bridges then demand will cut way back.

One of the issues this company had and was a good buying opportunity was when they were trying to develop and repair one of their ports. Believes this company is absolutely essential because of Asian economies as well as to the health of the interior BC and Alberta. A “must hold” in any portfolio.

Last quarter had a slight miss and that was because shipments were quite a bit lower than people had anticipated. This is something that can always be made up in the next quarter. Demand for coal seems to be coming back to a great extent. He finds this a very expensive stock, trading at a very significant multiple to cash flow.

(Market Call Minute.) Sell half of your holdings as it is a little bit rich. Feels there is a chance they will buy a competitor and there may be some stress.

Largest coal handling terminal in North America. A toll business, very stable and contracted. Undergoing capacity expansion that will increase free cash flow. 4% dividend. Trades at a discount to other infrastructure companies. At some point it would be a perfect asset for a pension fund to buy. There is a potential for a dividend increase further out on the horizon.