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Roger Conrad

7:08

Possible yes, but it's certainly not inevitable or even likely. Atlantica has proven it can survive as an independent entity, even when its sponsor Abengoa SA went bankrupt. And the cash flow from the current portfolio of assets is pretty solid. Again, when people talk about strategic reviews it sets the imagination into overdrive these days. But I think whatever they come up with if anything will only be positive for shareholders and that's the important thing if you're going to own this Aggressive Holding.

Jimmy

7:08

Hi, Roger: What is your short term target for ENBL? Thanks.

Roger Conrad

7:12

I think they can get to 20 this year if they keep reporting strong numbers, as they should given the activity in the SCOOP-STACK of central Oklahoma and the Haynesville. They've also been pretty disciplined about improving the balance sheet. I think if they take care of 2019-2020 debt maturities they're going to be in very good shape to restart regular dividend growth, which in this environment of everyone wanting to self-finance would be read as very bullish. The other big issue here is of course what Centerpoint does with its shares now that it's closed on the Vectren merger. The next opportunity to hear more is when CNP announces earnings at the end of the month. I'm not holding my breath but if it's done the right way we could see 20 very fast for ENBL.

Lawman

7:12

Your view on the MLP pipelines stocks, and EPD, MMP, and SHLX, in particular.

Roger Conrad

7:17

We don't track SHLX in the Utility Report Card but as you know we do in EIA. I really want to hear what management has to say about dividend policy next week (Feb 21), which I think will say a lot about what Royal Dutch intends to do with this MLP. I think they have great assets and the payout is safe but again the question of what the GP is going to do with the MLP is hanging over this stock. I talked about EPD and MMP earlier in the chat a very bullish way and don't really have a lot to add. They're blue chips operating in an industry where there's a shortage of capacity that's arguably starting to hold back US oil and gas production particularly exports. And the investment public is generally afraid to buy their equity on reasonable terms, so they're having to self finance, which in turn is holding back development. I think the situation will resolve itself with EPD, MMP, ET, SHLX et al trading at much higher prices.

Lawman

7:17

Is AES a but at this level?

Roger Conrad

7:18

I've raised our buy target to 17--which is still only about 13 times expected 2019 earnings versus a DJUA multiple of 18.5 times. I expect good results on Feb 27 but I'm not willing to go higher until the dividend and credit rating do. Maybe that's greedy but I think the discount to the DJUA will remain relatively wide until those two things happen.

Domenic

7:19

CenturyLink CTL, just cut div from 2.16 to 1.00 price now 12.78 what are your thoughts?

Roger Conrad

7:23

I won't repeat what I said earlier in the chat. I would also again call your attention to the Alert we sent out today on CTL as well as Clearway Energy, which also cut its dividend today. My quick thoughts though are this was a capital management move and not one where there was an immediate imperative to take action. In fact, the Q4 numbers were better than where management had been guiding. Shrinking revenue is still a challenge, though that's largely because of consumer wireline that's increasingly less important to EBITDA. Rather, management made the decision that cutting debt faster now was more important ultimately to shareholder value than what it pays in dividends now. I'm not certain they're correct, and I notice most of the analysts who egged them on to take this action didn't raise their ratings today. But what is certain is this company is going to have a lot less leverage a year from now and will therefore be in much better shape to emerge as a broadband leader with 5-G rolling out. Hold.

Lawman

7:23

Is AETUF a sell in light of the low prices for Canadian crude and natgas? Is the dividend sustainable? Would you buy moer at this level?

Roger Conrad

7:28

I think they've previously cut the dividend to a point where it should be sustainable in all but the worst case for prices of Canadian energy. For one thing, the CAD950 mil in credit lines is wholly undrawn now and all that's left is CAD9 mil in maturities for 2019, 2020 and 2021. They also covered all their CAPEX and dividends with cash flow last year with room to spare, despite an horrific price environment. I can't say I'm particularly excited for the company, which is clearly hamstrung to some extent by weak energy prices. But unlike virtually every other E&P operating exclusively in Canada, ARC is once again proving its a survivor. And there is help on the way with TRP building more pipelines, so this is definitely one that may get an upgrade from me sometime this year. Keep asking about this one.

Lawman

7:28

Is AGLXY still a buy?

Roger Conrad

7:30

Yes. I discussed it a little earlier in the chat regarding what I think are overblown investor concerns about political risk. But the bottom line is they have power plants that are making a lot of money now, and investments in Australia's coal power phase out that will do the same down the road. And they're getting well ahead of the curve on distributed energy in the country, mainly solar. I still like it under 18 using that ADR symbol.

Lawman

7:32

Many years ago you recommended ANCUF, and it has done very well. As I continue to hold this stock, would you recommend continuing to hold it, buy more, or sell?

Roger Conrad

7:35

Happy to hear it. This one doesn't pay much in the way of dividends but it is an exceptionally solid outfit that's consistently found ways to keep growing in a cash flow business. I think of it more as an acquirer, with Parkland Fuel Corp (TSX: PKI) always a possibility. From my perspective I like something with a bit more yield but this is a blue chip and it's not expensive at 15.7 times expected 2019 earnings either.

Lawman

7:35

Still like BCE?

Roger Conrad

7:36

Yes. As I wrote in the February issue of CUI, I thought Q4 results were good and guidance was strong. And the stock is very cheap ahead of 5-G rollout in 2020. A solid value proposition of 5% plus yield with nearly 5% annual growth on tap.

Lawman

7:36

I read your previous comments on BEP. However, while I know you like it, would you buy more at this price?

Roger Conrad

7:37

Yes. Again with the caveat I never recommend overloading on any one particular stock. But the yield is solid and combined with an annual growth rate of 5-8% is an attractive value proposition. It's buy up into the low 30s.

Lawman

7:38

You long ago recommended BERY which I bought then, and continue to hold. What are your current thoughts on this company?

Roger Conrad

7:39

I'm happy you made money with it, though it's more or less flatlined over the past year. It's not one I've followed personally for a while and doesn't pay a dividend. But it is relatively cheap at 13.4 times expected 2019 results and as you know it's grown pretty consistently.

Lawman

7:42

What are your top recommendations in the MLP space, and do you think now is a good time to buy MLP's?

Roger Conrad

7:44

I do think it's a good time to buy best in class MLPs. Their earnings have been turning higher for better than a year, they're self funding enough to be able to grow largely independent of the capital market and no one seems to like them. That's a good combination for any recovery. For names, EPD, ET, MMP, PAA and NS are all in solid buying territory now. I'd also throw Kinder Morgan in there as well as ONEOK (under 65), though they're not MLPs, along with Pembina and TransCanada.

Lawman

7:45

EXC is getting pricey. Do you think it will go higher, and will you recommend selling as it is over your buy at price?

Roger Conrad

7:47

I'm not recommending anyone pay more than my target of 45. I do think this one has proven the value of its business model. But I think it's likely to continue to trade at least at a slight discount to the DJUA so long as it relies on sales of nuclear energy in the wholesale power market. That reliance is diminishing by the way and I don't see any reason why Exelon won't keep growing earnings 6-8% a year (its target). But it has come a long way in a hurry and the best in class utilities for the most part are trading at high valuations.

Lawman

7:47

Do you now anything about GLNG, and OSG, if so, please share your thoughts on these companies.

Roger Conrad

7:49

We are holding an Energy and Income Advisor chat later this month and will discuss tankers more thoroughly then. Suffice to say we still see risk to dividends in this sector, even though Golar has basically gutted its payout. There will be a time when this group is attractive again but at this point we see better value and less risk elsewhere.

Lawman

7:49

Do you see electric cars having a significant impact upon fossil fuel consumption in the next ten or so years and, if so, how will this effect producers and midstream companies?

Roger Conrad

7:52

They haven't to date even in places where adoption has been considerable. I think if the Chinese continue to drive battery innovation--cheaper and more efficient--EVs will continue to catch on, especially in certain markets. There are still a lot of challenges, including range and lack of suitable charging stations. But I think car companies are certainly thinking in terms of this kind of drive train for the longer term. That said, I think it will be a long time before this will really pressure fossil fuel demand if you're including natural gas. So far the hype has run way ahead of reality.

Lawman

7:52

What are your thoughts on buying NTTYY at this level?

Roger Conrad

7:53

My buy target is USD50 for the NTT ADR NTTYY. You can read more about it as a Focus List stock in the February issue of CUI, which we posted Monday.

Lawman

7:53

Your thoughts on Canadian nat gas producers such as PEYUF?

Roger Conrad

7:55

I'd be careful of them at this point. They will at some point get their product to market to bring up selling prices. But I'd rather own the midstream companies that will make that happen for the time being, including TransCanada and Pembina. If I were going to own one it would be ARC. But we're still officially rating that one a hold. Peyto is very low cost but until gas prices do bounce back it's hard to see that stock going anywhere after cutting the dividend by two thirds.

Lawman

7:55

What are your thoughts on Canadian pipeline company PBA?

Roger Conrad

7:56

As I indicated earlier in the chat, it's a great one. Buy target is 35 though until we see earnings on the 21st. By the way, please tune into the EIA chat later this month Lawman. I'll look forward to speaking more with you then.

Don

8:24

Roger--what Canadian utilities do you think represent the best value now? Algonquin, Fortis or Canadian Utilities? Will the Canadian dollar bounce back vs. the US dollar in the next year or two. Thanks for all that you do!

Roger Conrad

8:27

I like Algonquin under 11 with a yield of 4.8% growing 10% a year, and clear growth drivers at its regulated utility operations (coal to wind), contract power sales and global venture with Abengoa, where the plan is to drop assets down to Atlantica Yield. The other two are also buy rated and high quality, though Fortis is now in large part a US company.

8:30

I think the Canadian dollar has generally been in a bottoming pattern versus the USD since mid-2016. The fact it hasn't gone higher was a first a function of the NAFTA conflict with the US and the threat of trade sanctions and now is in part the result of inability to commodity exports to global markets--as well as worries about growth in China, which has emerged as a major trading partner. I do think the country is sound fiscally and that the Canadian dollar is cheap on a purchasing power basis, which argue for a higher CAD/USD exchange rate. I do believe that's likely to happen in the next couple years, though admittedly that's what I said a year ago.

Thank you for your question.

Bill

8:30

The subject of a large market drop is rampant; -40%-80%. Some say it will never happen, others say by 2020. What would be a realistic guesstimate of a drop% if it did happen ?

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