JotCast | 8/26/25 Capitalist Times Live Chat

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8/26/25 Capitalist Times Live Chat

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Frank

5:00

In CUI you cover BEP but not BIP or BAM. In EIA you cover PAGP but not PAA. Any reason for these not being covered?

Roger Conrad

5:00

Hi Frank. PAA and PAGP are basically two ways to play the same company. PAGP has been the pick we've had in EIA. But the two pay the same dividend and own the same assets--PAGP's only assets are shares of PAA. So our advice on PAA should be read as the same for PAGP.

Brookfield Renewable is entirely focused on electricity generation. It's an extraordinary collection of assets from North American hydro plants that are coming up for contract renewal at higher rates, 51% of leading nuclear power EPC Westinghouse and a well run global portfolio of wind, solar and storage.

My reservation with Brookfield Infrastructure is that it is far more diversified and frankly outside the CUI coverage mandate. It's also a well run firm, one we should probably pick up in EIA.

Victor

5:03

Hello Elliott, Over a year ago FANG was performing very well. Around October of 2024 FANG started a decline and it hasn't recovered. What is your opinion on this one?

Elliott Gue

5:03

I like FANG. It's one of the lowest cost producers in the Permian and they've done a great job squeezing out costs and making savvy acquisitions. They were also among the first to discuss cutting CAPEX to preserve FCF this year.

I suspect the problem for FANG stock is that they've been making a lot of deals -- the massive $26 billion buy of Endeavor closed last year is one example but they also closed a $4 billion deal in 2025 as well.

I think all of these deals will pay off in a big way. They're crown jewel assets and there aren't many acreage packages left in the core of the Permian. It makes sense for FANG to want to add drilling inventory and scale.

However, investors tend to shun names like FANG when sentiment on oil sours. If you look at a chart of oil, prices really started to come in about a year ago which roughly corresponds to FANG underperformance.

EOG is an example of a name then tends to do well when markets are more defensive re: oil -- that's also been the case since last summer.

Elliott Gue

5:03

In our view, current oil prices are unsustainable and you'll likely see sustained $80 to $90+/bbl in the next 12 months. In that environment FANG really shines. We do prefer PR right here -- a smaller player in the Permian with low breakeven costs and a peer-leading yield while we wait for oil to move again.

das555

5:05

I sent this question in as an email pre-chat, but didn't see it. I currently own EPD, ET and MLPX. I am considering further midstream investment and have been looking at WES. The distribution is high and covered, but I am concerned about its dependence on OXY. In fact during the last oil crash, OXY suggested they were considering selling some WES shares. Do you see advantage in diversifying into WES or simply adding to the quality companies I already own.

Roger Conrad

5:05

I did actually answer your question about an hour and a half ago in the chat. The short answer is I think you'd be better off considering Plains--either PAA or PAGP. The yield is slightly lower but I think there's a good deal more upside, particularly as Plains is exiting Canada NGLs and deploying the proceeds into Texas infrastructure. We sold OXY from Energy and Income Advisor on a less compelling production profile--moving to Permian Resources.

JVA

5:10

Your current opinion on CVS? Thank you for conducting these sessions.

Roger Conrad

5:10

Thanks for that question. CVS Health Corp is a recommendation in CUI Plus/CT Income, though the current price is now above my highest recommended entry point. We rode it down last year because I believed the company's integrated model of pharmacy/healthcare/health insurance could work. And now with management raising guidance and chief competitor Walgreens going private as a cash cow for its owners, it's road ahead looks increasingly promising, despite what's been erratic health industry regulation under the Trump Administration so far. The company has not raised its dividend so far this year, which is one reason I haven't raised my buy price. But I'm increasingly comfortable holding the stock.

Sohel

5:16

Hello Roger, Thanks for your advice on getting into EPD and ET at great prices over the last few years. I am enjoying substantial increase in share price and pretty hefty distributions to boot. I do have a somewhat generic investment question for MLPs that have K-1s. The fact that there are no taxes on the distribution is great for a retired investor. However, if one does eventually plan to sell the tax consequences seem horrific. Thera are LT capital Gains which is not bad, but there is also a lot of recapture Ordinary Gains which get taxed pretty heavily. In general, is the plan to invest in an MLP to pass to heirs with stepped up basis and avoid all this recapture tax issue?

Roger Conrad

5:16

Thank you Sohel. They're great companies that survived a titanic shakeout in the previous decade and have emerged stronger than ever for it. I think we're going to see higher prices for both--especially since midstream stocks tend to gain most later in the energy upcycle.

Passing along partnership interests to your heirs is indeed a time honored way to avoid taxes on them. Owning MLPs in a tax deferred account (Roth, SEP IRA etc) should also avoid taxes, since only withdrawals are taxed. But if you own MLPs in a taxable account, I don't know of a way to sell without paying the tax. The good news is I can't think of a good reason to sell either stock at this point.

Alex M.

5:20

Hi Roger. Is there a reason that NWN hasn't been participating the utility sector rally this year? Thanks.

Roger Conrad

5:20

Hi Alex. Northwestern is still in the black for the year by about 8% which isn't nothing. But I think making so many acquisitions has probably held back performance. I do expect that expansion to pay off in faster earnings and dividend growth, once the company starts realizing synergies and the benefit of operating in places like Texas where customer growth is faster. And the stock is trading below my highest recommended entry point of 45--unlike my favorite natural gas utility Atmos Energy--which has become a Wall Street favorite and is now quite expensive.

Sohel

5:22

Hi Roger, Has your outlook on WES changed any? Last you suggested it was buy closer to $35-36 but not above $38.

Roger Conrad

5:22

That's pretty much my view on WES. The yield is very tempting and management just increased it . But as I've said several times in this chat, I see a much longer runway for companies like Plains--which have a more diversified customer list. WES could well be a takeover target. But it's also closely tied to Occidental--it's largest producer customer. And that's been a limiting factor.

Sohel

5:31

Hi Roger, Could you bottom line the HASI recommendation? Briefly still a buy? Thanks

Roger Conrad

5:31

I think so Sohel. I did answer an extensive two part question on HA--actually it was the first post of this chat. But the short answer is HA had an exceptionally diversified portfolio, a strong track record of managing risk including regulatory and tax related, an ability to prosper from growth of areas advantaged by OB3 like energy storage and access to low cost private capital (KKR) with an investment grade credit rating--which backs up management's Q2 earnings call boast that it could help project developers replace the loss of tax equity under OB3.

HA as a stock was a huge winner under Trump 1 and generally a loser under Biden. The stock is up about 8% year to date after being under water most of the year--following solid Q2 results. I like it at this price.

Guest

5:34

Roger, Thanks for the chats. Among other stocks, I currently hold PEYUF, POR, HTO and NWN. Would appreciate your Buy/Hold/ Sell assessment of each.

Roger Conrad

5:34

In brief, all of these stocks are currently rated buy at their current prices.

We cover Peyto in our "Canada and Australia" coverage universe in Energy and Income Advisor. It's still the same very low cost producer of natural gas--and stands to be a big winner as Canada's export sector takes off.

The other three are tracked in Conrad's Utility Investor. The main thing they have in common is investment plans that are on track and supporting guidance earnings and dividend growth. I highlight Q2 results and guidance updates for all three in the Utility Report Card on the CUI website.

Guest

5:35

Thanks Jim T

Roger Conrad

5:35

Thank you for being with us today!

Frank

5:39

I have owned Peyto (PEYUF) since it was, I think, a Canadian Trust. I see you have it listed as a "Hold". Any reason that you don't have it with a "Buy Under" price?

Roger Conrad

5:39

We have a Dream Buy price of USD10 per share and a take profits price of USD20. That information is also shown in the coverage universe tables in case EIA readers were unaware. And we now provide a Dream Buy and Take Profits price for all the companies in our CUI and REIT Sheet coverage universes as well.

I would say 12 would be a potential entry point for Peyto. Near term earnings are likely to stay under pressure from low commodity prices. But it's a very solid company as it's been for the 20 years since i started following it.

Jay

5:46

roger, you have JKS as a buy up to about 40 and its trading closer to half that. Can you comment on this company in China?

Roger Conrad

5:46

Hi Jay. Jinko is really the global leader in manufacturing solar panels and related products and services. Their current models boast the highest absorption rates in the world and continue to advance. And they're a very low cost producer as well. China is by far its most important market. But its products are making gains elsewhere--and that includes the US where the company has production facilities.

I think there are a couple reasons why the stock has underperformed for example FirstSolar by 10 percentage points this year. One is US investors prefer FSLR because the US government is unlikely to ban us from owning the stock. Two is FSLR operates in a protected market (the US). Jinko is Chinese, so it has to compete full on globally. And it's possible the US government will ban US ownership someday.

All that said, Jinko is still the world's best solar manufacturer. Competition will only make it better in coming years. And once Chinese manufacturing rationalizes, profits will return.

Roger Conrad

5:47

All that's to say Jinko's not for the risk averse. But solar is only going to grow in coming years. And its products are only going to become more compelling.

Maynard

5:55

Hi Guys.... I'm just wondering why Forum Energy Technology (FET) is hitting 52-week highs and Oneok OKE is hitting 52 week lows. Thanks.

Roger Conrad

5:55

Hi Maynard. You're really comparing apples and oranges--ONEOK is a midstream company, while Forum is an energy services company. FET is also restructuring and earlier this month raised its 2025 guidance. OKE did reaffirm guidance for 2025 as well.

I will say that we have recommended FET in the past but still generally view it as a later cycle play. Our current services companies are BKR and SLB--both of which have heavy exposure outside North America and offshore. FET also has that focus, announcing a contract to supply submarine rescue in Indonesia earlier this summer.

I think OKE's weakness this year is in part to the massive surge in the share price in the past couple years, along with weakness in midstream stocks in general. The company appears to be running well and is looking more like a buy for the first time in a while.

Susan P

6:03

Over the past 6 months, AES has risen over 20% with trailing 12mo return of -25%. Do you think there's more upside? And, thanks to both of you for your unique advisory service(s) and the hard work that goes into it.

Roger Conrad

6:03

I do think there's a lot more upside ahead for AES. The summer surge was due in part to takeover interest expressed by private capital concerns. It's still possible the company will go private. But I like what this company should be able to do on its own--with an investment plan set to produce 7-9% annual earnings growth even with OB3's rapid phase out of renewable energy tax credits. The storage opportunities, for example, are immense. So is the regulated utility investment opportunity. And much of the business is still outside the US--where it's always had to compete without tax credits.

I think people have been misjudging AES--especially the shorts. And I think it's going to wind up a lot higher.

Thank you for participating today--as well as on my Discord channel "Dividends Roundtable!"

Mark W

6:11

Hi Roger,
Thank you for all your hard work.
I have subscribed to your research for a very long time.
Do you have any thoughts or comments on Dominion and how it relates to or is potentially different from the two offshore wind projects the administration is looking to shut down.
The two in discussion are the Revolution Wind LLC and the just announced Maryland Offshore Wind Project.
I welcome your thought on Dominion’s CVOW project in light of recent news.
Thank you kindly for your thoughts on this matter.
Cordially,

Roger Conrad

6:11

Hi Mark. Thank you so much for your loyalty. We appreciate it.

I really don't think the Trump Administration is going to challenge the Coastal Virginia Offshore Wind facility. For one thing, doing so would hand Democrats a huge political issue in an election year where we're going to elect a new governor, Lt gov and AG, as well as legislature. Revolution Wind's developer is a Danish company Orsted. CVOW is a regulated utility project, with most of the cost already billed to Dominion's ratepayers. We'd have to eat the cost. And we'd be short 2.6 gigawatts of generating capacity at a time when AI data centers are booming in Dominion's territory.

Dominion is also investing in natural gas and Virginia has built a major pipeline--Mountain Valley. Earlier this year, the Administration stopped work on an offshore wind plant in New York--so it could pressure the governor to greenlight new gas infrastructure developed by Williams Companies. It allowed work to resume after proclaiming it has extracted concessions,

Roger Conrad

6:13

Continuing on CVOW, the New York governor has denied making concessions on Empire Wind. But the action on Revolution Wind looks connected to Administration attempts to get a new pipeline into New England--also to be developed by Williams Companies. And that looks like the play to me here as well.

6:17

Again, this administration is going several steps further to favor its preferred energy sources than the first Trump administration did, or even the Biden administration did. So everything I've said here is based on a certain amount of conjecture. Maybe they will try to block CVOW--despite Governor Youngkin's support for the project. And however this comes out, I think they're writing a playbook for "keep it in the grounders" next time around. But I think all five of the offshore wind facilities under development now are going to get built eventually. Every day of government ordered delay will cost money. But the MW are just too badly needed.

Victor

6:23

Hello Guys, thank you so much for this live chat. You always provide insightful information. My question is about ENB, it's close to the 2022 highs. Are you concerned that this one is overbought, or do you see more upside? Thanks.

Roger Conrad

6:23

I think Enbridge is executing its business plan--which now includes regulated natural gas utilities as well as extensive gas and liquids midstream infrastructure. I like the venture with ONEOK to build a natural gas pipeline from the Permian to the Gulf Coast announced today. It's supported by contracts of 10 years "or longer"--a classic Enbridge condition for committing capital.

The share price is now a bit above my highest recommended entry point of 45--even with the Canadian dollar weakening a bit since mid-summer. But it's still below the profit taking price of 65. Add to that the fact that midstream stocks typically rally last in an energy upcycle and we should see appreciation in the CAD eventually--good reasons to stick with it.

Guest

6:30

Hi Roger,
My question is about AHH, which you have as a Hold even though it is below your dream price.   The stock makes up only 1.50% of our entire portfolio.   However, our main three sectors are:   Tech - 23%, REITS - 21% and Utilities - 18%.
When you say not to overweight on one stock, what do you advise when investors are overweighted in an entire sector but underweighted in a particular stock in that sector, and how often do you rebalance?     Do you have specific sector percentage recommendations for retirees for utilities and REITS?   For example, do you recommend a higher percentage in the Utility Sector than in the REIT sector, and in each sector, what should we do if there are individual stocks like AHH that are below your dream price?   Should we add more to an individual position even though it is part of a sector that we are already overweighted in?
We are cautiously aggressive.   Our primary holdings are in high quality tech.   Thank you so much.

Roger Conrad

6:30

One reason for the hold on Armada Hoffler is they cut their dividend earlier this year. That may be a sign that business fortunes have touched bottom. But it's a REIT, not a utility stock. So I think we want to see more signs the business is turning around.

I do recommend 21 "First Rate REITs" in my monthly REIT Sheet advisory--part of a coverage universe about four times that size. So if you are interested in finding some more REIT names, I'd encourage you to check it out by calling Sherry at 877-302-0749, 9-5 ET, M-F.

As a general rule, I'd say your sector diversification is a good idea. Of course, that's not really knowing what stocks you own. And I think that makes more difference that sector balance. I'm a little wary of the tech weighting, considering where valuation are right now. But again, the S&P 500 is basically 37-38% now in just 8 Big Tech stocks.

Bonnie

6:31

Hi Roger,
My question is about AHH, which you have as a Hold even though it is below your dream price.   The stock makes up only 1.50% of our entire portfolio.   However, our main three sectors are:   Tech - 23%, REITS - 21% and Utilities - 18%.
When you say not to overweight on one stock, what do you advise when investors are overweighted in an entire sector but underweighted in a particular stock in that sector, and how often do you rebalance?     Do you have specific sector percentage recommendations for retirees for utilities and REITS?   For example, do you recommend a higher percentage in the Utility Sector than in the REIT sector, and in each sector, what should we do if there are individual stocks like AHH that are below your dream price?   Should we add more to an individual position even though it is part of a sector that we are already overweighted in?
We are cautiously aggressive.   Our primary holdings are in high quality tech.   Thank you so much.

Roger Conrad

6:31

Hi Bonnie. I see the above was your question. I think AHH will probably come back. But I like other REITs better.

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