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Roger Conrad

4:30

As you've seen, the general philosophy with CUI Plus is to keep things diversified across multiple sectors. This follows a long-time philosophy that investors who rely on harvesting dividends really can't afford to take big portfolio hits that would require them to in effect sell their seedcorn at a bad time for the stock market. Diversification maximizes the possibility that the portfolio will generally hold value on the premise that what's hot will balance what's not.

As for percentages, the only real rule I have is not to let one sector comprise more than 20% of a portfolio--no matter how attractive. In CUI, of course, I divide the coverage universe into 9 different sectors--so there's diversity even among essential services companies. But again my preference is to hold best in class companies from multiple sectors--which is the goal of CUI Plus.

Arthur

4:32

Stock-Nippon- What are your thoughts about this company(NTTYY)?

Roger Conrad

4:32

NTT remains a top recommendation in our Aggressive Holdings. I liked the recent earnings at the company as well as its most important unit DoCoMo. They are really rolling into 5-G on a good note and the wireless operations have largely put the rate cuts behind them now. I recently raised the buy target for the ADRs (NTTYY) to 28 or lower--note the stock split 2-fo-1 on January 13.

JPJ

4:37

Roger, you have the following 5 stocks as a hold. Brookfield Renewable Partners, Crown Castle, Southern Co., OGE Energy and WEC Energy Group. Should any or all profit be taken? I depend on dividend checks. Thanks for the sound advice over the years.

Roger Conrad

4:37

Yes to Brookfield, Southern Company and WEC Energy, which are both CUI Conservative Holdings. OG&E and Crown and Castle are not Portfolio holdings and aren't quite there in any case.

Remember that my advice here isn't to sell everything. It's just to consider taking a little off the table--which you can then invest in the "loaded laggards" we've been featuring in CUI. Regrettably, that doesn't include February Conservative focus stock Comcast at this time, as it's run-up this week. But there are other high quality stocks still trading below buy targets. You can also just put the money aside for a while and see how the markets shake out. No one should feel pressured to invest when a market is running higher so quickly as this one is.

Pam M.

4:40

Hi Roger,
Have a small position in Exxon(XOM) with 20% loss. It is rated a buy below 80 in "Report Card". Earnings down last quarter but projected earnings for April are up. Good dividend. What is your take?
Thank you for your help!

Roger Conrad

4:40

I still stand by that advice. Some of the commentary I've read about super major oil companies really does border on the absurd. Mainly, companies like XOM, CVX, BP, Total etc literally have stronger balance sheets than most countries. That means they have the resources to dominate energy markets for many years to come--and it will take decades of poor decision making (which we haven't seen so far) to bring them down. Yes there's some divestiture going on but this company yielding nearly 6% and set to raise again in April is a bargain.

Phil

4:43

I own both Brookfield Renewable Partners (BEP) and TerraForm Power (TERP). Since the February newsletter where you have holds on both stocks but recommend that we consider lightening up when they reach 50 and 20 respectively, both stocks have breached those limits. What are your current recommendations? In general, renewable energy stocks seem to be enjoying a considerable momentum in the market at present. Is this a factor that we should take into account over the short term? All things being equal, do you foresee recommending that we hold onto the Brookfield Renewable Corp (BEPC) shares that we are due to receive once the takeover of TERP is completed mid-year?

Roger Conrad

4:43

First off, congratulations for owning these two companies--which up until about a year ago were decidedly out of favor no matter what they did. I do think both BEP and TERP have crossed over into territory where it makes sense to take some money off the table, regardless of how much I (obviously) like what they're doing. They definitely have momentum at their back, but they're also a bit unmoored from the measures of valuation they've historically traded on. Again, I'm not recommending selling everything and the BEPC shares I think will make a great long term holding. But I do believe it's time to reap at least a little of what we've sown.

Michael L

4:46

I, like many on this chat I'm sure, are subscribers of several of your Capitalist Times publications. I'm sure you will get plenty of questions on your thoughts regarding AM's results posted last night. So, what do you think? Looked like they are still on track to me.

Roger Conrad

4:46

I have a full analysis of Antero Midstream and its primary customer/parent Antero Resources in the upcoming issue of Energy and Income Advisor. The short answer is I think the plan these companies laid out to harden themselves against tough industry conditions is working. For one thing, I didn't see any significant changes to guidance for 2020. I don't think they're out of the woods entirely, which is why AM is a hold and still on the Endangered Dividends List in EIA. But so far so good and this stock is cheap by any measure.

David F.

4:50

Roger, the spot LNG market is currently falling apart. Any concerns about this development on any of your recommended stocks? Do you have any recommendations on LNG shipping companies -- especially their preferred stocks? Thanks.

Roger Conrad

4:50

Not really. Dominion Energy and Sempra Energy would be the two in the CUI Portfolios that own LNG infrastructure--i.e. export facilities. And these operate under long-term contracts. And keep in mind that feedstock prices for LNG (dry natural gas) are also very low in the US, so the lower costs offset where prices are affecting margins.

We had a full length feature on LNG in a recent issue of Energy and Income Advisor--including a lot of data on where these facilities are--and I'd advise anyone interested in the subject to check it out. As for LNG shipping/tankers, this is a sector we've been looking at closely for valuation but have yet to jump. And I'm very happy we have not, given the meltdown at GasLog Partners (NYSE: GLOP)--a company we once recommended but advised selling some time ago when it was roughly four times its current price.

This is one sector with great yields that investors should avoid until there are real signs of a bottom--it doesn't appear to be in yet.

Howard F

4:51

I just want to thank you for your time and effort put into these chats. Another reason I have been with you for many years

Roger Conrad

4:51

Thanks Howard. As I've said before, from our end, these events let us see what you our customers are interested in and really help us to focus. Thanks again for participating.

bob

4:54

With the Corona virus hanging over the stock market and EIA reporting endless weekly oil builds, is know the time to buy energy names including mlps??

Roger Conrad

4:54

I think the way to look at it is by individual company. Is the company standing up to the stress test of reduced producer CAPEX and softer prices--both producers and midstreams? If so, these prices are probably about as low as we're likely to see for them. If not, we do want to take our lumps and move on. This is really a market where quality is asserting itself. It is time to buy the best--but also high time to sell everything else.

Christopher

4:57

Question on Enel SpA ENLAY how much future earning power do you see in this stock?
The under price started at $6 then $8, and now $8.50

Roger Conrad

4:57

What's happened is their plan to reinvent themselves has continued to progress. As you might remember, this is a name we've had before and later sold when the underlying business seemed to weaken under the weight of all those acquisitions (Endesa especially). We came back when they appeared to have handled the leverage challenge and started investing heavily in renewable energy on a global scale, while cutting costs organization wide. I've basically raised the buy target in tandem with this progress. Interestingly, the stock has continued to burst through these targets despite weakness in its home currency the Euro. That leads me to believe there's still more juice in the tank, though now at 17.3 times expected 2020 earnings I'm not inclined to raise the target further at this time.

Bruce

5:00

Have you ever covered CEPU? Also, have you ever covered OGZPY, or is that more in Elliott's area?

Roger Conrad

5:00

I have not to date covered Central Puerto SA of Argentina, though I will take a look. My preference for exposure to that market has been Enel SpA, which was the subject of the previous question. Gazprom is more on Elliott's radar screen. We have looked at in Energy and Income Advisor in the past. But we're currently favoring more US names.

Troy

5:01

Just curious as to why you don't cover ENB.

Roger Conrad

5:01

Troy, we do cover it in our Utility Report Card coverage universe--one of the very few midstream companies we do track in CUI. I answered a question on it earlier in the chat. But we list it as a buy up to 33--or effectively a hold at its current price. Check out the comments column in the URC table on the website for more on my view on Enbridge.

Christopher

5:04

Chinese coronavirus outbreak do you think is will have effecting on CLP Holdings Limited ?
Wondering about all of the factory shutdowns on electricity demand in Mainland China
Any update on CLP Holdings LIminted?

--Christoher

Roger Conrad

5:04

I don't think coronavirus will have any lasting impact on CLP Holdings. They may take a hit from some China sales but generally speaking these are contracted and are not a particularly large piece of the business. And in Hong Kong, the company's earnings are steadied by regulated rate base. Q4 earnings will be released February 24 at which time we'll get a better read. But in general as I pointed out earlier in the chat, essential service companies like CLP tend to weather downturns and in fact investors often turn to them as havens in tough times.

Richard

5:08

Hello Roger, this is the guy that always ask about SO. We have had quite a run since the last chat. Can I relax a little now? Long time follower, I remember enjoying the printed copy of your last newsletter. Long time holder of AEP, SO, ETR, D and Duk. They are awfully high, should I trim some? In IRA account. Many thanks, Richard

Roger Conrad

5:08

I think you just pay attention to the "Consider Taking Profits" column of the "Trading Above Target" table that I post in every Portfolio article of CUI. Southern has just crossed over to the point where one might consider taking a little off the table--i.e. selling a partial position. Entergy and Duke are right around there as well. Dominion is above the highest recommended entry point but not quite at that level. AEP is also a candidate.

Again, I want to say I'm not recommending selling it all of any of these stocks--at least not yet. They're all great companies that I've had every intention of holding long-term. But current valuations are well past anything we've ever seen and the primary catalyst pushing them up is market momentum--some of it created by passive investing strategies. The little you take off now may go a long way later.

martyR

5:10

why is AM on such a steep downward slide as compared to other outfits thanks for the great job

Roger Conrad

5:10

Thank you for participating!

Again, this is one we cover in Energy and Income Advisor and not in CUI. I have provided a pretty detailed answer on Antero to a previous question in the chat. But the bottom line is Q4 was solid enough to keep holding what's become a very cheap stock.

Cindy

5:12

Hi Roger. Do you recommend a maximum percentage for any one holding in a portfolio?

Roger Conrad

5:12

My standing advice is to generally strive to hold everything in proportion. Obviously, that's impossible to accomplish exactly without a lot of trading, which is counterproductive. So the practical rule is don't let a single company become such a large piece of your wealth that it can do serious damage should it pull back for whatever reason.

Guest

5:14

CHL seems to be holding well considering the caronavirus issue, although volatile from day to day. Hold for now or is this an opportunity to pick up a few more shares?

Roger Conrad

5:14

I think China Mobile is a buy so long as shares trade under 52--which has been my advice since we added it a couple years back. As I wrote above, I think you can make a pretty good case that wireless companies are actually coronavirus beneficiaries--since people will rely on phones more and with 5-G rolling out quickly. In any case, CHL is an essential service stock that's cheap--which is always good insulation against downturns.

P.M.Johnson

5:15

What do you think about MPLX? It's fundamentals keep looking pretty good to my simple mind, but it just keeps sinking.

Roger Conrad

5:15

I don't really have anything to add to what I said earlier in the chat. I think Q4 earnings proved the payout is safe and there's some real upside once Marathon Petroleum decides what to do with its ownership stake and eliminates current uncertainty.

Ray S

5:15

Hi Roger, Thanks as always for hosting these chats. In December you added SJI to the Conservative Portfolio. Having taken profit on some of my holdings I added some SJI.

5:20

Sorry. Didnt finish the question I was asking re SJI.. I wanted to get your comments on SJIU a mandatory convertable that offers over 7%. Could you give me your thoughts on SJIU?

Roger Conrad

5:20

I'm definitely interested in what numbers South Jersey Industries reports for the calendar Q4 on February 26. But I do think its focus on regulated utilities in what's a favorably regulated state will keep it on track to generate the big earnings gain management is guiding to. And if it succeeds, I think we'll see this stock close the valuation gap with other natural gas distribution companies as I expect. I have not looked at the mandatory convertible--I will say we did well recommending one of these issued by Kinder Morgan a couple years back, mainly because we sold it well in advance of the actual conversion date. We did less well when we sold a Frontier Communications mandatory convertible well ahead of conversion--though we did avoid a total meltdown. Bottom line is these are now set and forget income investments. And while risk at SJI is low, I would prefer the common stock where there's the probability of dividend increases and greater appreciation.

herm

5:23

Is the recent news for Sprint an opportunity to but T or VZ

Roger Conrad

5:23

I think so. For one thing, there are now only three big US wireless companies--which whatever management said to win regulatory approval means less competition and less pressure on margins. And T-Mobile USA will have its hands full for a while absorbing Sprint while trying to keep up on 5-G at the same time--hype notwithstanding, it's well behind Verizon in the key areas. I also think there's a fair chance we'll see money come out of TMUS, which is really trading at too high a premium for this industry. Admittedly I've underestimated the momentum behind that stock but it does cut both ways. Just observe those buy targets--which are 40 for T and 60 for VZ.

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