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6/26/25 Capitalist Times Live Chat

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Roger Conrad

2:56

Hi Sohel. Energy Transfer LP is another pipeline company that's making a big play to service AI-enabled data centers with natural gas--especially in Texas where it operates extensive infrastructure. I actually featured that in a presentation I gave for MoneyShow and I can send you the slides if you're interested.

The key for ET and others will be getting data center owners to sign long term contracts, preferably capacity based. And working with utilities is always best. There's been a lot of talk about data centers going "off grid" as a way to get supplied with electricity faster. And pipeline companies are well positioned to capitalize. But on the other hand, natural gas prices can be volatile. The main advantage of being grid connected is access to a diversified power stack where you can lock in a price with the provider. Being off grid and gas dependent leaves companies open to big price spikes--just as cogeneration companies found out in the '00s.

Roger Conrad

2:56

I do like Kinder Morgan on a dip to the mid-20s as well.

Elliott Gue

3:22

Here's something we don't normally do during our monthly chats -- we're sending out a detailed alert this afternoon recommending the sale of the remaining position in Occidental Petroleum (OXY) from the model portfolio. We're replacing it with a new position in Permian Resources (PR), a stock we mentioned favorably on our roundtable discussion earlier this month. What stayed our hand in recommending PR was that we expected the geopolitics-driven pop in oil to fade and thought that would bring down PR stock a bit. That's happened and so now we see the opportunity to buy Permian Resources (PR) under $16 with a roughly 4.5% dividend yield.

Hans

3:29

Elliott, You have XOM as a hold and OXY with a rating up to $ 55 while the price is in the low 40 th. Why does XOM get all the attention and very little discussion in reference to OXY. Thanks

Elliott Gue

3:29

I like the long-term prospects for OXY. The stock is fairly cheap as well. However, as we discussed on the roundtable earlier this month, OXY took on significant net debt to buy CrownRock and will likely remain focused on paying down net debt for some time to come rather than dividends/buybacks. That wouldn't be an issue with oil at $75, but with oil where it is today, that will constrain their dividend/buyback potential into probably the second half of 2026. So, we don't really see as many upside catalysts for OXY shares near term. OXY was a huge winner for us through 2021-23 and we recommended selling some of the position into strength (half) a little over 2 years ago. Today we're selling the remaining position in OXY from the model portfolio and adding Permian Resources (PR), a smaller name with more compelling near term catalysts and a higher dividend yield.

Elliott Gue

3:31

As for Exxon, it's my favorite supermajor. We thought the stock got a little ahead of itself on the run-up well over $100 but its a core portfolio recommendation. We're often asked for our favorite supermajor to buy and that's why we write/talk about it a great deal. Most likely, we will revise our buy target on XOM higher eventually as IO think the stock has significant upside in a longer term world of $80+ oil.

Don L.

3:35

Your thoughts of the removal of AES from the DJUA?
Regards

Roger Conrad

3:35

Hi Don. That actually happened some time ago. Dow Jones replaced AES with Vistra Corp (NYSE: VST), a non-utility electricity producer stock that had been performing considerably better.

We've done quite well with Vistra in Conrad's Utility Investor the past two years especially. And AES has been a laggard, so it's hard to blame the index sponsor for swapping it out in favor of a stock that would provide more upside--and therefore investor interest for the DJUA.

As far as investment implications for AES and Vistra, my view is AES is by far the better buy at this point. Vistra is in fact at a point where it might make sense to harvest some profits.

Alex M.

4:12

Hi Roger. What are your thoughts on ATN International (ATNI)? Worthy of inclusion in your coverage universe? It's a small (and struggling) telecom that recently raised its dividend. Thanks.

Roger Conrad

4:12

Hi Alex. I have not looked at ATN International to date, though it looks like an interesting name. The company has been generous paying dividends but has been basically running in place so far as revenue. It also appears to be somewhat dependent on federal rural broadband subsidy, which may be cut back under the federal budget bill now being debated in the US Senate. Management reaffirmed 2025 guidance in early May when it released Q1 numbers in early May. That's positive. But I would want to look at this company a bit more before making a recommendation.

Thank you for bringing it to my attention.

Alex M.

4:17

Hi Roger. There has been a massive divergence in performance between VZ and T over the last 12 months. What do you attribute that to? Thanks.

Roger Conrad

4:17

AT&T is up roughly 57% over the past 12 months and about 26% year to date--vindicating investors who stuck with it during the restructuring earlier this decade. Verizon is in contrast up about 10% for the 12 months and 9% for 2025 so far.

I would basically attribute the divergence to the fact that AT&T was pretty down and out a few years ago when it made the decision to cut loose Warner Media. The company has since returned to health. Verizon in contrast never had to restructure and has been a much steadier performer over the longer term.

I do recommend both, though AT&T is trading above my highest recommended entry point of 25 currently--making it a hold.

Ron

5:03

Potential impact on ethane restrictions to China for Epd and Et.

Elliott Gue

5:03

China accounts for roughly half of US ethane exports. Some of the restrictions that initially caused caused issues at US ports have subsequently been relaxed and remaining restrictions are likely a bargaining chip in US-China trade negotiations. So, it's likely export restrictions will be further relaxed as part of this deal. Also note that while China accounts for a large portion of US ethane exports, it's a far lower portion of exports of other NGLs (<20%) like propane. Finally, what we've seen in markets like oil is that trade restrictions (ie. Russian oil exports to Europe) just shift trade flows to other regions -- Russian flows were redirected to India, and Europe imports from the Middle East increased accordingly. So, given how diversified EPD and ET are I just don't see a significant long-term impact on their business. And the trading in these stocks also seems to back up that sanguine view.

Alex M.

5:06

Hi Roger. POR is looking interesting at these levels with a recent dividend hike and a 5%+ yield. Why is the market not appreciating it at this price? Thanks.

Roger Conrad

5:06

I rate Portland General a buy at 45 or lower. The company is coming off a solid Q1, affirming 2025 earnings and long-term growth of 5-7%. And the dividend increase of 5% with this month's payment is in line with past years.

The past few years, we've seen stocks of electric utilities operating in the west soften as wildfire season approaches. And that may be what's happening now to POR as well as other companies like Avista.

Wildfires are clearly getting worse in the West. And Edison International's current challenges in California--as well as Hawaiian Electric's--demonstrate the extent of utility liability. That said, however, companies are arguably better prepared than ever. And states including Oregon and even California are supportive of utilities trying to meet the challenge.

My view is we're likely to see this wildfire discount the next few years gradually diminish. Meantime, it's a good time to buy/reinvest dividends in western utilities with strong track records like POR and AVA.

Alex M.

5:14

Hi Roger. With GIS recently lowering guidance expectations for 2026, do you still like KHC in the space? Thanks.

Roger Conrad

5:14

As I wrote in the most recent CUI Plus/CT Income, I'm basically considering Kraft Heinz as more or less on probation as a portfolio position. The company still has a great balance sheet and cash position. And the plan to cut costs by streamlining while building key brands still appears on track. But the stock rates a hold pending what we see in Q2 results due out in late July/early August.
What I'm looking for the company to meet management's most recent guidance. The headwinds to the sector are well known--inflation, competition, more aggressive US federal regulation. And I'm not expecting to see much growth. But meeting guidance will demonstrate management is keeping the company on solid ground. If not, I will probably move onto something else.

John A.

5:21

1. With millions of Solar panels having been installed in the US, and with their finite lifespan, is there any public company out there which is set up to recycle these panels and is this an opportunity to get "in" before the matter becomes a torrential reality?

2. In a high inflation environment which stock sectors perform the best - Utilities, REITS, Natural resources? How did these sectors perform in the '70's? Other ideas?

Roger Conrad

5:21

Hi John. Yes, there are multiple processes and companies vying for this business. One I track in CUI is Jinko Solar (NYSE: JKS), which is currently putting a recycling program in place in Washington state that could be rolled out across the country if successful. Jinko is the world leader in solar panel efficiency and a global giant.

I will also say that the issue of recycling solar panels has been fairly overblown. That's hardly surprising given the rise of intensely partisan energy politics. And unfortunately, we can expect more from both "sides." But recycling solar panels looks like a decent business for Jinko and others in coming years.

The keys to performing well as businesses in elevated inflation environments are pricing power and balance sheet strength. Natural resources and real estate as "hard" assets tend to command additional interest. And both performed well in the 1970s.

Contrary to popular belief, utilities has positive returns in the late 1970s. But I would expect them to perform better.

Roger Conrad

5:24

Continuing on that, I would expect electric utilities to perform better this time around. That's because power is in high demand, which means their investment is being supported. Also, CAPEX now is mostly in projects that can be completed in 12-18 months--such as grid upgrades and solar/storage deployment. Short construction times means costs can be controlled and assets start boosting earnings much sooner. That's a huge contrast to the nuclear and coal projects of the 1970s, which took years and often saw huge increases from initial cost estimates due to inflation. I would also add that high inflation would discourage big multi-year projects like nuclear and offshore wind, and even natural gas. And it's good reason to expect to see more solar plus storage enter the grid--whether tax credits are extended or not.

kidcurry

5:33

What is in the wind with Chairman Powell and the stock market? Will it be a TACO Time or not?

I am expecting Trump to replace Jerome Powell with Sidney Powell that
way DOGE could claim savings by not having to change letterheads. LOL.

Jarod or Ivanka, maybe both?
You know, someone much more qualified.

Roger Conrad

5:33

Good question. And unfortunately one that's pretty much impossible to answer at this point.

I do think the president is a little more constrained on this decision than he would otherwise indicate. Mainly, firing the Fed chairman before the end of his term and/or replacing him with someone perceived as less qualified/dovish on inflation could wind up pushing up market interest rates and undermine confidence in the US dollar--DXY is already about -12% lower since January.

Doesn't mean the president will or won't fire Powell. But other than recommending some gold here, we don't think this possibility is worth altering strategy for.

Hans

5:40

Roger, With WDS being involved with Lng and the recent partial sale of the LNG plant in Louisiana what is your outlook for WDS and your rating. Thanks

Roger Conrad

5:40

Hi Hans. We track Woodside in the Canada and Australia coverage universe table, which you can find under the Portfolios tab on the EIA website. Current advice is a buy up to 20--and investors have an opportunity to buy below that point currently.

I think selling Stonepeak 40% is a major step forward for Woodside's Louisiana LNG Infrastructure project. The private capital firm is now committed to funding $5.7 bil of the project's cost, or basically 75% if CAPEX for 2025-26. And Woodside gets $1.9 bil in cash, representing Stonepeak's share of already incurred costs. Woodside next reports earnings July 23,

Phil

5:47

Your comments on GE Vernova please. Doesn’t GEV’s business characteristics qualify it for regular coverage in CUI? Many thanks as usual for these very useful chats.

Roger Conrad

5:47

Hi Phil. If I did include GE Vernova, it would be under the "Utility Technology" subsector. The GE spinoff figures to be a major player to the extent US utilities elect to build out natural gas generation in coming years--which seems like a fair bet despite some headwinds ranging from the shortage and rising cost of turbines to the scarcity of qualified labor. And GEV has already signed deals with Duke Energy and NextEra Energy for gas development.

GEV's dividend isn't particularly attractive at the moment. And with the stock up 182% over the past year--66.3X forward P/E--I would argue it's no bargain. But i will consider adding it. Thanks for the suggestion.

Dudley

5:53

Many thanks for all your support. Would appreciate your thoughts on TLTW & ITRI? ITRI keeps going up. Just started small position and hoping it will pullback. Thanks

Roger Conrad

5:53

Hi Dudley. Thank you for joining us today. TLTW--iShares 20+ year T-Bond Buy Write ETF--is up a little over 5% year to date and 4% over the last 12 months. And it's paid solid though volatile monthly dividends along the way.

But at the risk of being promotional, I think the best you're going to do in the bond market is to check our Elliott's advisory "Smart Bonds." He also does a free version on Substack.

I think with Itron we want to be patient. In fact, we're already at the point where it makes sense to consider taking some money off the table. The company's business is in the sweet spot right now--with strong utility connections and a raft of data-related products that help utilities cut costs. But it's not cheap and it looks like insiders are cashing in a bit.

Ron

5:59

Are there any positive upcoming catalyst for XIFR?

Roger Conrad

5:59

Hi Ron. I think the former NextEra Energy Partners is just going to have to make the case that it's recovery plans are on track. And the only way it's going to do that will be meeting or beating guidance with its results--Q2 is expected in late July.

What comes out of the federal budget bill regarding energy tax credits is likely going to be a short-term catalyst up or down for any company with wind, solar and energy storage assets. Interestingly, the most recent Senate version is very favorable for energy storage--which would be very good for XPLR's parent NextEra Energy and by extension XPLR. But this is the season for horse trading and there are too many question marks to make an intelligent bet at this point.

I think XPLR's recovery will continue regardless. But it would likely happen sooner rather than later if at least some tax credits survive--boosting investor sentiment.

Roger Conrad

6:28

OK. Well that appears to be all we have in the queue and from emails this month. We want to thank everyone who joined us today for your questions and comments--and especially your continuing confidence in us.

6:29

Keep an eye our for an email from us tomorrow morning with a link to the transcript of the complete Q&A, which we'll also be posting on the CUI and EIA websites.

6:30

If for any reason your question was not answered to your satisfaction--or if you think of something else to ask--please drop us a line at service@capitalisttimes.com and we'll get back to you as soon as we can.

6:31

Thanks again. Have a great evening. We'll look forward to chatting with you next month!

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