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4/30/24 Capitalist Times Live Chat
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Hans
4:03
Roger:  In reference to your previous answer on MLPS, is it better in an IRA account to reinvest Div. or take distribution for tax purposes. Thanks
AvatarRoger Conrad
4:03
The answer to that would be if someone wanted to own more of the stock in question--and so reinvest--or wanted cash to invest in another stock, in which case you would not reinvest. Taxes will only come into play if total UBTI across the portfolio is $1,000 or greater (tough to get that high)--or when you start to take distributions from the IRA, which are taxed at your rate and the fact whether dividends come from C-Corps or MLPs would be irrelevant.
Alex M
4:11
Hi Roger.  Any concerns about BCE's dividend sustainability at this point?  It looks like the combination of the CAD dollar and high rates is really hammering the stock.  I just wonder if they steal a page from some other management teams and reset the dividend as a "capital allocation decision".  Thank you.
AvatarRoger Conrad
4:11
I would doubt BCE would "re-set" its dividend unless the company absolutely could not afford to pay it. This is a Canadian company that's heavily owned by pensions and banks that depend on the dividend--and a CEO who reduces the payout even for good reason would basically be committing professional suicide.

The stock is down along with the Canadian stock market, Canadian dollar and telecom sector in particular--as analysts have become increasingly bearish on telecom due to perception that competition and reduced consumer spending will pressure margins this year. On the other hand, earnings and cash flow continue to support the dividend--which was just increased this month. We'll see May 2 how earnings and guidance held up. But I think we're already pricing in a lot of bad news that isn't likely to happen. And I intend to stick around at least to see how Q1 results shook out.
Sohel
4:17
Hi Roger, What's your outlook on the REIT WPC at the current time? The generic REIT advice to wait for further declines applies here as well?
AvatarRoger Conrad
4:17
I prefer an approach of taking advantage of low prices now by investing incrementally in strong names. And I think WP Carey Q1 results released just now show the business is indeed healthy, with management affirming 2024 AFFO guidance of $4.65 to $4.75 per share, solid investment volume of $374.5 mil, on target dispositions of $889.2 mil, solid rent growth (3.1%) and debt reduction. Q1 AFFO per share was -13% lower than a year ago--which tracks the impact of the NLOP spinoff. And the strategic plan is nearly complete, on target with management expectations. I rate WP Carey a buy up to 70--consider taking a one-third position now, another third in six weeks and a final third six weeks after that.
Victor
4:30
Hello Elliott, CCJ is down more than 7% today. CCJ reported 1st quarter 2024 earnings of CAD 0.13 per share. This missed the consensus of CAD 0.28 by CAD -0.15. That's like a -50% surprise. It seems to me that the stock is ready to test lows 40 again. Should we feel worry about it?
AvatarElliott Gue
4:30
I haven't had time to go through the call in detail yet. However, based on my initial read, it appears that most of the miss is down to timing issues which isn't that unusual for them to have quarter-to-quarter variability in their sales.

There's a shortage of acid at their Inkai JV in Kazahkstan, but that's arguably bullish for uranium prices.

It's also not unusual for that stock to see a hit following earnings; case in point it was down around 7% last time they reported back in February and the stock went on to make new highs earlier this month.

Also, pretty much everything was down today -- looks like 85% of the volume on NYSE was on declining issues and S&P 500 down 1.6%, Nasdaq 100 down closer to 2%.  The entire market looks vulnerable to more of a correction in my view.

So, it's certainly possible we'll see another retest of support there, but I'm not specifically worried about Cameco from a fundamental perspective and we continue to see it as the best way to play an intermediate to longer-term
AvatarElliott Gue
4:30
rally in uranium. From a shorter term trading perspective, we did recommend taking profits on a trade we had in an oil ETF (UCO) for our commodities trading service (CT Trader Commodities) and we also booked out of a trade in URNJ, which is a more leveraged bet on small uranium miners back in March. But, these are short-term calls, not particularly relevant for longer-term holders.
Bonnie Beth
4:32
Hi Roger, thank you for all your investing insights.   Last week as per your REIT sheet I purchased shares of CWYUF and CUBE and added both to my portfolio.   I also added shares to AY because of the high dividend yield of 8.92%.   Has your view changed on any of these?   Also, what is your outlook for AQNU?  I originally held AQN and swapped to AQNU.
AvatarRoger Conrad
4:32
Hi Bonnie Beth. There's been no change to the advice for any of these. CubeSmart announced Q1 results last week that generally matched internal expectations and management affirmed its 2024 financial guidance, including AFFO per share of $2.59 to $2.69. SmartCentres will announce earnings on May 8 and has since maintained its monthly dividend of 15.417 Canadian cents. Atlantica is expected to announce results on May 6 and is unlikely to have much in the way of surprises, though we will hear more on the two wind assets purchased in the UK and possibly the strategic review. And with Algonquin, results are due out May 10--and I expect to get a better indication of plans for the sale of unregulated renewable energy assets including its 42.16% share of Atlantica. My advice is still to hold AQNU the preferred to the June 15 conversion date, at which time we'll receive 3.333 shares of common stock, barring a rise in AQN to $15 or higher by then.I intend to hold the AQN common thereafter.
Hans
4:37
Roger:  Is BEPC a good alternative to AES.  Thanks
AvatarRoger Conrad
4:37
Yes, though they're not identical. AES, for example, has regulated utilities in its portfolio while Brookfield Renewable is 100% a contract power producer. But both stocks have similar drivers--the most important of which being renewable energy project growth. They also both have global operations--out of favor now but that ultimately will be again. Brookfield also has a slightly higher yield. I like them both obviously.
Hans
4:38
Elliott:  With the market volatility do we have to worry about  "SELL IN MAY"?
AvatarElliott Gue
4:38
I actually have a post going up about seasonality in the stock market later this week on my Substack. Looking at the S&P 500, April is usually a pretty strong month, but we tend to see "choppy" trading range action in May and June. That's followed by a summer rally effect in the July-early September period.

While I wouldn't recommend trading solely on these seasonals, I do see some worrying trends underneath the surface. The list includes the portion of stocks that are making new 4- and 8-week highs and the percentage of stocks trading above their 50-day moving averages. Also, tech -- a market leader last year -- is one of the worst-performing sectors in the past 3 months.

So, to answer your question, I do think you could see markets pullback more in the next month or two -- I doubt it's the top of the rally, but it could be similar to what we saw in that August-October period last year.
Guest
4:42
Many are describing EPD's recent quarter as "So,so".  Is that your opinion?
AvatarRoger Conrad
4:42
I think "solid" is a far more accurate description. Enterprise is executing on their projects. Their assets are seeing rising volumes and profitability to support the balance sheet, fully finance investment plans and keep the dividend rising faster than 5% a year. Institutional support is still very strong with 18 buys, 3 holds and no sells. And insiders are heavy net buyers. They also won what could be an extremely valuable oil export permit.
Hans
4:48
Roger: BHP, what is happening to this stock div. of 5% compared to Rio Tinto 7.4% should I consider substituting BHP for RIO.  Thanks.
AvatarRoger Conrad
4:48
The semi-annual dividends of major mining companies like BHP and Rio Tinto basically track their earnings--which in turn pretty much follow the prices of the metals and minerals they produce. So basing investment decisions on where the dividend yield stands at any given time is problematic in my opinion. I continue to like BHP as the largest mining company in the world with arguably the strongest balance sheet. I also like its focus on key metals it can acquire/develop dominant positions in, the geography of its key reserves (esp Australia) and proximity of reserves to major markets (esp China and India).
Bonnie Beth
4:54
Hi Roger, we currently own 600 shares of ETR.   We expect to receive another 600 shares via an inheritance in the next 6 months.   This would represent a very large portion and high percentage of our utility portfolio, overweighting us in ETR.  Any thoughts about the one year outlook and if it is wise to take the additional shares or sell?
AvatarRoger Conrad
4:54
First of all, Entergy is a well run utility, as management proved again with strong Q1 results and by affirming 2024 adjusted EPS guidance of $7.05 to $7.35. The stock also continues to trade below my highest recommended entry point of 110. That said, it's always better to be balanced and diversified and ETR isn't the only high quality utility out there. The key consideration when you rebalance a portfolio is always taxes. Inherited shares of course eliminate this concern because of the cost basis step up. My view is we should see some rotation to utilities this year, as they've been laggards for a while--and this would push prices higher. But again, if that happens, ETR won't be the only beneficiary.
Randy D
5:00
Hello Roger and Elliott, does either of you know of a web page, or online videos where they give explanations or otherwise make it easier to file my tax return when I have sold an MLP?   I have spent countless days and hours trying to figure this out and there seems to be precious little information online that helps. Spending $150+ per hour on a CPA to do my taxes is likely going to wipe out any gains I made on these investments, so I am trying to do it by myself. Thanks for any advice.
AvatarRoger Conrad
5:00
You might check out the website of the "Energy Infrastructure Council" and make a query there. They are the successor organization to the National Association of Publicly Traded Partnerships, which before that was MLPA. We've attended a number of their events over the years. They were a great opportunity to meet and speak with management teams of these companies in the past. And while they're no longer the massive bazaars of the past, the group will hold an annual conference this fall in the DC area I'm considering attending.
Dragomir
5:03
Hi Elliott and Conrad. There is a company called Truflation that claims to have a more accurate way of calculating inflation. Are you familiar with them? Their numbers are quite different from official sources. I've included the website. https://truflation.com/dashboard. Any ideas? Thanks.
AvatarElliott Gue
5:03
Thanks for the question. I am not familiar with them to be honest. Looks like their numbers are lower than the official numbers on CPI, PCE, etc.

I don't know that I buy that. I look at commodity prices and intermarket relationships like bonds/stocks, US dollar/Commodities, etc and they're all screaming that we're in a world of higher for longer inflation.
Guest
5:04
Hello,I'm a fairly new subscriber and enjoying your content. I'm looking to invest quite a lot in the midstream sector and I was wondering how often you update the "recent prices" in your portfolios? Thank you both very much.
AvatarRoger Conrad
5:04
The numbers in the tables on the EIA website now are as of the close last Friday (April 26). We are not linked to any live quote source, so I would strongly suggest a free source such as "Google Finance" for comparing prices. What you can count on is the buy-up-to prices being current.
Victor
5:04
Hi Elliott, I think that you mentioned over month ago that you expect to see VLO trading close to $200 by the end of this year and XOM around $150. Do you still feel that way? Thanks.
AvatarElliott Gue
5:04
I think that VLO at $200 and XOM is a strong probability over the next 12 months.  Even at those prices these stocks are cheap relative to their valuations in the last cycle.
Victor
5:06
Elliott, CF has not been performing well. They will be reporting earnings tomorrow. What's your opinion on CF?
AvatarElliott Gue
5:06
We recommended exiting that stock in both longer term portfolios and in the trading services (CTT Commodities). I don't like the fact that corn acres planted are coming in because corn is the key crop for nitrogen fertilizer. I think it's a good stock to watch and that we will see another bull cycle there but short-term, I'm worried.
Hans
5:10
Roger: NPIFF what is your outlook, does it have a good growth potential.  Thank.
AvatarRoger Conrad
5:10
I track Northland Power in Conrad's Utility Investor. The basic value proposition is a high yield backed by contracted cash flow, combined with a portfolio of large offshore wind projects that when completed will significantly add to cash flow. The company will update us again on their progress with Q1 results on May 15--but so far everything is proceeding on time and budget. I rate it a buy at 20 or lower for more aggressive investors. I think it will sell for twice that if they get these offshore wind facilities up and running on schedule. Risk is probably a low teens price if they have to cut the dividend to save cash.
Guest
5:12
Roger: Further to the UBTI on MLPs in IRAs.  Due to selling some MLPs (in my IRAs) with capital gains over the past few years, my fiduciary has had to complete and submit a 990-T to the IRS.  I have had to pay tax on some of the gain.
AvatarRoger Conrad
5:12
Thank you for sharing that. I would guess you were talking about a pretty heavy amount of gains--and that probably your taxes would have been quite a bit higher if you had held those MLPs outside an IRA. Am I right?
Alex M
5:24
Are you gentlemen seeing any value in BMY at these prices?  Both BMY and PFE seem to be in deep value territory right now.  Thanks.
AvatarRoger Conrad
5:24
It looks like reduced demand for coronavirus vaccines--and the lack of a headliner to make up the difference--has caught up with Pfizer over the past year. You still have a company with an A-rated balance sheet that's expected to generate roughly $1.5 bil in free cash flow after dividends this year. And insiders have bought the decline. BMY appears to have been hit hard by losing laswuits filed against the Biden Administration on drug prices, as well as concerns about China decoupling. But again you have an A rated balance sheet and nearly $8 bil in free cash flow after dividends the last 12 months to back the dividend. My problem with both stocks is they've slumped at the same time pharma rivals Abbvie and Merck--which we have in our CUI Plus portfolio--have soared to levels well above my highest recommended entry points. They're arguably overvalued but the primary reason is they've been outperforming rivals as businesses. And that makes me wary of the underperformers BMY and PFE as well.
AvatarRoger Conrad
5:26
I'm not ruling out ever buying these stocks and I agree they do look cheap. But in Big Pharma the game is coming up with new blockbuster treatments so revenue can replace that from treatments where patents expire and competition eats into sales. Abbvie and Merck have been doing that better than BMY and PFE and valuations notwithstanding they're the sector stocks I still want to own--so long as they keep outperforming as businesses that is.
John R.
5:32
I wish to place fresh money into data centers. You had previously recommended CCI. Would you still recommend CCI rather than AMT ?
AvatarRoger Conrad
5:32
Hi John. I wouldn't consider Crown Castle a data center play. They don't own and operate them, though their fiber services facilities. And in any case, the primary value driver is going to be the Board battle. The company has been beaten up mainly because T-Mobile US is buying out contracts held by the former Sprint, DISH/Echostar's attempt to build a fourth major 5G network is on the brink of total collapse and its been forced to freeze the dividend for the time being. I rate the stock a hold--mainly because all that bad news is well in the share price and I think the dividend will hold. But even with dramatic action by management such as selling the fiber unit, recovery is going to take time.

I do rate American Tower a buy up to 200--and it does own some data centers. But if you're really interested in data center facilities, I suggest checking out my REIT Sheet. Give Sherry a call at 877-302-0749. We have at least one pretty good offer out there. And I'm 100% confident you won't find any better resource.
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