Inter Pipeline (IPL.TO) Buy, Sell or Hold

Inter Pipeline (IPL.TO)

19.12

+0.28 (1.49%)

as of Nov 1, 2021, 8:00:00 pm Market Open.

777 watching

BUY

He just bought it and likes it. Pays an 8% dividend, though at a higher payout than its peers like Pembina, though the divvy is safe. A propane facility will open in the coming year; so cash flow per share should grow 30%. When that's done, then the stock will look more attractive on valuation.

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BUY

ENB-T vs. TRP-T vs. IPL-T. IPL-T has the biggest upside because the price is not reflecting the PDH facility. ENB-T and TC are more stable companies and within those he likes ENB-T because Line 3 will most likely com on line first.

HOLD

A utility operating oil pipelines. He does not own it. The dividend is strong although the payout ratio is has increased to 74% of cash flow. They have had a cash draw of over $1 billion last year. Earnings are expected to be flat this year. Yield 8%

HOLD

He still owns this one. The Heartland project is good, but he wonders about their ability to capitalize it. He thinks once the project is built, the increased cash flow will be very good. The dividend pays you well to wait. He would be a wait and hold on this one. He sees $30 as a floor for the stock as there was bidder for the company at that level in the past. Yield 7%

DON'T BUY

Why has this dropped? He doesn't know. He doesn't own this anymore, because they bought storage facility assets in Scandinavia which didn't work out. Gibson and Pembina are better, midtream steady eddys with strong fundamentals. Don't pick a bottom with IPL.

DON'T BUY

Natural gas is challenged, while our WCS continues to trade at a big discount to US oil. IPL is rangebound, so look elsewhere for opportunities.

BUY

Pays a 7% yield, good for income investors. True, some are concerned about the dividend, but he isn't worried. Over two years, you'll make at least that 7%. A defensive move into IPL isn't bad in this economic climate. Income is important; dividends often comprise half a stock's return. The worst is behind IPL.

HOLD

Income safe? Both ARX (8% yield and 100% payout ratio) and IPL (yield of 7.7% payout ratio of 110%). He thinks both should be fine to continue with the dividend. If he had to pick, he would prefer ARX as a producer and with lower debt.

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COMMENT

IPL vs ENB If he was just interested in income, he'd pick IPL. But he's interested in total return, so he owns Enbridge. Both good companies, but concern with IPL was no capital appreciation. Enbridge has continued to grow dividend at 10%. IPL has a huge capital project on the go, which diverts cash from dividend increases and share buybacks. Enbridge getting Line 3 replacement in place would derisk the story. The dividend would then creep down to 5%, which implies a stock price north of $60.

WAIT

It has a nice yield. They are probably paying out too much, and the balance sheet is going no where. The earnings forecast has steadily decreased for the last two years and is accelerating. It could go up to $25, which appears to be the ceiling. The price it's at now could go either way.

BUY

The plastics they produce are not the ones being declared war on by the world. The plastics are harder and higher density. This is the longer lasting and more durable plastics in things we use every day. The plant is on time and on budget at the present. He started purchasing last summer and continues to add.

COMMENT

ENB vs IPL? A classic case, where he prefers ENB (due to its growth profile). Getting a higher yield on IPL will be overshadowed by a higher capital return on ENB. He owns ENB.

BUY

7.6% dividend yield. He recently added it to his income portfolio. They are building a major facility in Western Canada which when it comes online their cash flow will be a third higher so he thinks there will be upside in the stock. There will be some debt buildup in bringing this facility on line.

PARTIAL BUY

He's stepping into oil now. Chart shows a downtrend since 2017. IPL is a slightly riskier play in the oil space, but it has bounced recently. He likes the oil space looking ahead.

COMMENT

Other pipeline stocks look better. He likes ENB, for instance. He likes IPL's graph with a set of higher lows, but if it falls below $20ish, it means it will fall lower. Breaking above $25, conversely, means IPL is rising further.

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