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11/29/22 Capitalist Times Live Chat
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Jeff
7:00
Do you think the DCP buyout from PSX is going to go through?
AvatarRoger Conrad
7:00
I think the question is if the parties can find a price that investors can accept. The August 17 offer from Phillips 66 was $34.75 per share in cash. The stock's move to north of $40 indicates the expectation it will bump that bid up. i agree with estimates I've seen for a final price of $38 to $39, which means there's limited upside from here to the takeout. We could conceivably see a stock based offer--which PSX could certainly do with its shares trading not too far from all-time highs. But if they did walk away for now and the economy slips into a recession, DCP would probably retreat to $30 or even less--the lower risk way to play this is to harvest the gains and move onto one of our portfolio midstream companies, some which yield almost twice as much.
Mike C.
7:02
With the sell on TDS, what about T and VZ, buy, hold or sell?
AvatarRoger Conrad
7:02
Hi Mike. No change on either AT&T or Verizon from what I said in the November issue of CUI. I still like them as cheap, high quality stocks with growing revenue that will eventually be able to realize growth from 5G.
Don
7:05
Considering the rise in interest rates, what is the upside in utilities that are yielding less than 3%, like PPL, WTRG, SRE, ATO, and XEL.  Thank you for doing these monthly chats.
AvatarRoger Conrad
7:05
Thanks Don. We like doing them. I like all of these stocks as buys  trading below my highest recommended entry points. As my comments in the Utility Report Card of the November CUI will reflect, they're all performing very well as underlying businesses in an environment of rising interest rates, inflation and recession risk, including PPL which I just moved to the Conservative Holdings. So long as they stick to long-term guidance, I think we'll see new highs in all of them.
Guest
7:07
Is now the time to take some profits on Peyto, Enerplus an Arc Energy?
AvatarRoger Conrad
7:07
I think the rule of thumb is if you have big gains in any producers, you might want to harvest a portion of them against a recession and resulting drop in energy prices. And all of these stocks have done well, trading above my highest recommended entry points.
Jeffrey H
7:13
Probably to late to be included, but what is your view of VET and the windfall tax possibility?
AvatarRoger Conrad
7:13
Not too late. I still rate Vermilion a buy up to 25. It was above that for a while in late August but is now below it and down a bit since Q3 earnings and guidance were released Nov 9. I think the retreat was due for a couple reasons, one being an apparent delay closing the purchase of the remaining ownership interest in the Corrib natural gas field. But otherwise, results were pretty solid and the dividend looks safe at just 26% of Q3 free cash flow. The company has been hit with a windfall profits tax in Europe, where energy markets are in flux going into winter. But this company is still making enough to fund all CAPEX, growing dividend, share repurchases and debt reduction. Bottom line, I'm still comfortable recommending Vermilion at this price.
Jay
7:16
The prison former REITS GEO and CXW seem to be rallying in the past month or so.  Any opinion on these?
AvatarRoger Conrad
7:16
I don't currently cover either one, though I will consider adding one the next time I publish the full REIT Sheet coverage universe in December. The fact neither currently pays a dividend is admittedly a turnoff when there are so many REITs that do. And this type REIT is as affected by politics as marijuana REITs. Thanks for the suggestion.
AvatarRoger Conrad
7:17
Well that looks like all we have in the queue for today, as well as from emails we received prior to the chat. Thanks to everyone for participating. We really appreciate your ideas and the chance to talk directly with everyone.
7:18
By way of a reminder, we will be sending you a link to the full transcript of the chat tomorrow morning, and it will also be posted on our websites. REIT Sheet readers can also expect their monthly update, probably mid-afternoon. Thanks again and here's to a great end to the year and holiday season!
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