You are viewing the chat in desktop mode. Click here to switch to mobile view.
X
Return toCapitalist Times
September 2023 Capitalist Times Live Chat
powered byJotCast
Prev Page View Full Chat Next Page
Hans
5:59
Elliott,  With oil around &90 and some experts suggesting higher prices, where to invest in oil now.  The portfolios with exception of Hes all have a lower buy rating than present price.
AvatarElliott Gue
5:59
Thanks for the question. Well HES is significantly below its buy price but there are several other oil-levered holdings that tard very close to those levels. PXD, for example, was above our buy price of $230 for weeks but has pulled back to just below our buy points over the past couple of days.  The same is true of EOG and SLB (a services company, but clear leverage to oil-related CAPEX).

Over time, we adjust these buy targets based on fundamental and technical developments in the stocks we track. But, we generally don't like to make very aggressive changes to price targets and positioning based on short term news and developments. That's because you'll often see pullbacks after a strong advance that give us a better entry point such as we've seen this month in names like EOG and PXD.
Tommy L
6:02
The REIT, CCI, has taken about a 33% hit year to date.  REITs as a group are down, but this is quite significant.  Your thoughts on this one, and those with similar businesses like AMT.  Thanks for doing these monthly webcasts.
AvatarRoger Conrad
6:02
Hi Tommy. Thanks for your questions today. I answered a question at length on Crown & Castle a bit earlier in the chat. My overall take is the dividend is safe and will continue to be increased at a low single digit percentage rate at least going forward. The core business of wireless towers and other infrastructure including small cells is absolutely essential to communications. And however their stocks have performed, CCI's 3 major customers Verizon, AT&T and T-Mobile US are more dominant than ever. The demise of their rivals like DISH does remove a growth angle for CCI. But at the current price, it's basically a very high yielding utility and I have no problem continuing to recommend the stock, with the caveat that REITs in general are likely to stay under pressure. I have the same take on American Tower, though its a bit more expensive as well as more exposed to foreign currency.
Mack
6:03
Now that the MMP-OKE deal has closed, will you be changing your recommendation on OKE to "Buy?"  Hopefully to include a 'buy under' price and 'Dream' price. Thanks.
AvatarRoger Conrad
6:03
Hi Mack. Yes, I did address this in the issue of Energy and Income Advisor that just posted. I think the new ONEOK is very attractive as a large, diversified midstream company by geography and operations. And it will grow faster than either MMP or the old OKE would have on their own, including the dividend. I rate it a buy up to 70.
Victor
6:03
Guys, PXD is under the buy price, it seems to be holding around $222, would you add more at this level or do you expect to see this one trading lower?
AvatarElliott Gue
6:03
We didn't raise the buy price because we felt the stock might pull back a bit from that $240+ level. However, yes, we're not back down in a range where we think the stock has significant upside potential.

I would say that we have not added to PXD in the model portfolio allocation. But, it's one of our go-to names should we decide it's time to put excess cash to work.

Right now we're being a bit cautious and keeping some dry powder in the model to take advantage of opportunities as they present this autumn.
Victor
6:06
Hello Roger, PBA has been in a downtrend for a while. How do you feel about this one short term and long term?
AvatarRoger Conrad
6:06
Hi Victor. I still like Pembina a lot. I think the downside has been due to a weaker Canadian dollar and concern about wildfires' effect on the business this summer and I expect management to answer any doubts when the company releases Q3 results, probably at the end of next month. The dividend is safe and with new pipelines starting up in western Canada as well as NGL export facilities, there's a lot of room for growth. Those who don't own this stock have a great entry point right now, though again with recession on investors' minds more downside is possible.
John C.
6:09
Please give thoughts as to CFR. Thanks.
AvatarElliott Gue
6:09
Cullen Frost is a quality bank and tends to hold hefty reserves, which reduces risk. I also like their geographic exposure in Texas.

That said, the regional banking industry remains in real trouble -- some deposit flight, still well over $108 billion in borrowings under the Bank term Funding Program (BTFP). Many banks have significant negative portfolio exposure to rising rates.

So, I recommended selling CFR more than 6 months ago at higher prices. And, to be honest, I think it's too early to wade back into the regional banks.

The time to buy these names will likely be after the recession starts and we see some credit events or "panic" out there. Then CFR, one of the highest quality names, would be among the first I'd consider.
Victor
6:09
Hi Roger, I believe you said that CVX has exposure to natural gas and it was benefiting from gas production. Technically the chart looks good. Do you see more upside on CVX?
AvatarRoger Conrad
6:09
I've owned Chevron and before that Texaco for over 30 years now and at this point I don't see any reason not to keep it another 30. The stock is a little expensive in my view right now. But the price is going quite a bit higher in my view by the time the energy upcycle winds down. And in the meantime, free cash flow is strong even at current oil and gas prices, which means high dividends, stock buybacks, debt reduction and continuing timely investments in key regions like the Permian Basin.
Arthur
6:12
Thoughts on SU?  Held it for years i
AvatarRoger Conrad
6:12
I think Suncor is a good company--we rate it a buy up to 35 in our Energy and Income Advisor Canada and Australia coverage universe. The downstream exposure leavens out the commodity price exposure, which makes the company a relatively conservative stock in the energy patch. And it's heading a lot higher as this energy cycle unfolds, with the dividend increasing as well.
Buddy
6:15
Please give the latest on NOV and FTI.  Thanks
AvatarElliott Gue
6:15
Generally we like both names and FTI is one we've written about adding to the portfolio. I think their leverage to deepwater in particular is impressive. It's the sort of name we'd look to add to the model on some sort of a pullback as we look for opportunities to put cash to work.

I would say uranium/nuclear power and the services stocks are two groups on the top of my list right now as potential additions for the portfolio.
Lorraine
6:19
What is your current take on KMI.  It seems to be in the doldrums even with rising oil prices.  Schwab rates it a D. I'm a long time holder, but am starting to wonder if that is a good idea.
AvatarRoger Conrad
6:19
Hi Lorraine. Kinder Morgan does actually have some exposure to oil prices from its CO2--which produces oil from its own wells using carbon injection. There's also NGL production, which as we noted in the just posted issue of EIA is quite bullish. The company's main business by far now is natural gas pipelines, which produce steady income but requires a great deal of capital to grow. Kinder the past several years has funded all its CAPEX with internally generated cash flow and intends to do so going forward. But that generally means slower dividend growth under these conditions. And that's likely why it's lagged some of the midstream companies like EPD. I continue to believe this stock is going a lot higher this energy up cycle. And in the meantime, the combination of strong balance sheet and low risk operations make it a very low risk way to collect a high dividend. Next earnings in mid-October should be very steady--and the company now has only fixed rate debt so earnings could surprise.
Sohel
6:22
Hello Roger, Thanks for holding these chats. KMI continues to languish. Can't seem to much over 17 then promptly reverses close to 16. What do you see as the outlook for KMI near term and long term. Yield is decent though not the best. How would you rate KMI vs ET? For some one who has both and is looking to add funds to one of them (besides a large holding of EPD, and smaller positions in TRP, ENB, PAGP) in this space.
AvatarRoger Conrad
6:22
As I answered Lorraine just now, I think Kinder will go a lot higher by the time this energy up cycle winds down. It may take a while. But keep in mind that midstream is always last to the party in an energy bull market, well behind producers for example.

I rated Energy Transfer as my top pick at the start of 2023 and it's still my favorite, as it successfully executes acquisitions (Crestwood cleared anti-trust today). I like all of the other stocks you list as well and additional investment is certainly recommended, with the caveat that there may be some more downside due to recession risk before we go higher again.
Jim T
6:25
Am concerned about the future (next 6 months) for AQN, AQNU as well as AY.  What is your current assessment.
AvatarRoger Conrad
6:25
Hi Jim. As I said answering a couple questions earlier in the chat, I think we have to keep holding both of them. Their fates are linked--and Atlantica isn't likely going anywhere until Algonquin sells its 42.15% ownership stake. And that may not happen until market conditions improve for prospective buyers. But there's very little risk to either company's dividend at this point. And the assets are solid and valuable. I wouldn't rule out even more selling pressure even as far down as they both are. But I think both are going to be at much higher prices in 12 to 18 months at the outside.
Jim T
6:30
Roger, this may be a duplicate, but am interested in TRP's progress in Canadian pipeline.  When is it scheduled to be completed and what is status of the cost over-run.  Also your assessment on the pipelines financial impact on the Canadian producers.   THANKS   Jim T.
AvatarRoger Conrad
6:30
The latest update from TC Energy is the Coastal GasLink pipeline is still on schedule and budget to enter service by early next year. The project was recently fined for an environmental violation. But the necessary asset sales to fund the work are locked in and the pipeline itself is contracted in heavy demand. I expect a full update when TC announces Q3 results in late October. But while the shares should continue trading at a discount until the pipeline is running, it looks like the project is in the home stretch. And once it is open, it will be very bullish for Canadian natural gas producers, particularly in the Montney Shale where ARC Resources (TSX: ARX, OTC: AETUF) are focused.
Roman A
6:34
Hi everyone, Capital Product Partners (CPLP) had a nice run from spring of this year up to the end of summer, but has now fallen back off. Any comments about this company? Thanks
AvatarRoger Conrad
6:34
Hi Roman. The glut of tankers that had been depressing day rates for years has not yet become a shortage. But conditions have improved and that's helped Capital Product Partners and others immensely to stabilize their businesses, though CPLP did take another sizeable impairment charge with Q2 earnings. We're still cautious on this group, and share prices as you've noted tend to take a hit when economic concerns grow. But we do have a tanker recommendation in the most recent issue of EIA--one that's focused in a niche (NGLs) where business is consistently growing and therefore the business is already growing.
Hans
6:36
Roger,  I don't know if I missed it, but any advice on ENB
AvatarRoger Conrad
6:36
I like it at these prices for a very safe dividend with modest growth. I also like the purchase of Dominion's natural gas utility business that will close next year--which makes the company a true integrated wellhead to burner tip company, though with no oil and gas production itself.
Lorraine
6:39
What are your thoughts on KMI?  It seems to be stuck around 16-17.  Thank you.
AvatarRoger Conrad
6:39
As I noted above, there are reasons why Kinder has lagged this year--the need to convert floating rate to more expensive fixed rate debt earlier this year was a very good one but resulted in lower distributable cash flow for one. But I like the assets and I think the stock is headed a lot higher before this energy price cycle runs its course. Midstream is always last to rally in an upcycle.
Roman A
6:44
After what seemed like years of middling performance, Holly Energy Partners (HEP) is up 26% in the last 3 months.  Was it rumored to be a takeover candidate or something? What's your opinion about this  limited partnership?
AvatarRoger Conrad
6:44
Yes, the general partner HF Sinclair (DINO) is buying in the rest of Holly Energy Partners it doesn't already own for 0.315 shares and $4 per share in cash. DINO shares have benefitted from stronger refining conditions. So HEP shares have also benefitted. The takeout offer value is less than half HEP's high point in the previous cycle, so this is something of a takeunder but definitely beneficial for those who bought after the early 2020 dividend cut. I think Valero is a better bet in the refining space and HEP is trading right around the takeover offer price, with downside in the mid-teens on unexpected deal failure. We rate HEP a sell for those reasons.
Jim T
6:44
Thanks agin for your expertise,
AvatarRoger Conrad
6:44
Thank you Jim.
Jim T
6:46
What is your current thoughts on ERF as it ia transitioning from Canadian to US drilling.
AvatarRoger Conrad
6:46
I like Enerplus, which we rate a buy at 18 or less in the EIA Canada and Australia coverage universe. The dividend was raised last month and I think it will go a lot higher as the company boosts output and uses free cash flow to buy back stock.
salvatore
6:48
Roger/Elliott      When the mmp/oke deal is complete the cash portion will offset taxes due .Do we have a game plan on the stock portion we receive . Thanks as always on the chats.
AvatarRoger Conrad
6:48
Thank you for your questions today! Our plan is to hold the new ONEOK, which is a buy up 70. It's a much stronger company than either Magellan or ONEOK was on its own. The dividend will grow faster and the stock is headed a lot higher by the time this energy upcycle winds up.
Connecting…