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TOP PICK
This company has adopted the income trust model for the North Sea but is a corporate structure. It has taken the fields that have been discarded by the majors and are producing very nicely at their low cost structure. 30,000 barrels this year giving them $3/$4 cash flow and hopefully 63,000 next year giving close to $7.70. Have 2 offshore rigs and are hoping to buy a 3rd to get them to 100,000 for $11 a share.
oil
gas
HOLD
Likes the pipeline area. Inter Pipeline (IPL.UN-T) and this one are 2 of the cheapest on a price/cash flow basis. Recently made an acquisition of a New York City power plant. This will cause some dilution, $.04 this year and probably $.07 to $.08 next year. Will also have to issue 32.5 million shares, which is a 5%/6% dilution. Wouldn't buy until you see the charts forming a base.
oil
gas pipelines
COMMENT
Some of his new accounts brought shares in which he hasn't sold, but he does not own. In general, you are not going to see the same growth rate in bank earnings as you have in the past 5 years. (You will probably see earnings growth of 3% to 5% but you will get a very good yield.) This bank is the exception, which is giving some first call earnings growth that is pretty good. If you are going to own any bank, this would be the one.
banks
COMMENT
Natural Gas: - Historically ratio of 1000 BTUs to oil is 6 to 8. With oil at $100, natural gas should be at $12, but he doesn't think this will happen. This is the shoulder season for natural gas so expect some price weakness. Looking out 2 to 3 years he is looking at Encana (ECA-T) for large caps and Cathedral Energy (CET.UN-T) and Pason Systems (PSI-T) in mid-caps.
COMMENT
Fertilizer Stocks: - There is a generational change in the dietary habits of people in the emerging nations. As wealth increases, they move from a vegetarian rice-based diet to higher proteins, which increases the demand for fertilizers/seeds. Using a 5-year view and these stocks are great Buys. He recently sold off many of his agricultural stocks because he was not sure of the market and wanted to maintain his client's capital. Thinks he will be back in the near future. Favourites are Agriun (AGU-T), Potash (POT) and Mosaic (MOS-N) in that order.
DON'T BUY
