Keyera Corp (KEY.TO)

Really likes this company. A diversified company within the energy industry. With natural gas midstream processing, natural gas liquid extraction, logistics, marketing, etc. they pick up some profitability at various points within the value chain. Extremely well-managed and a good balance sheet. His only problem over the years is that it has been more expensive than what he has wanted to pay. Currently trading at 23X forward earnings and 11 or 12 times cash flow. A client brought some into his firm, but has never bought this himself.

(A Top Pick Dec 8/14. Up 4.96%.) Gas gathering and processing. Doesn’t have a lot of direct commodity risks, but it does have throughput risks. Its assets are in the right area, and he thinks they come out of this downturn better. Still likes it.

(A Top Pick Dec 1/14. Up 1.79%.) Had been recommended when oil was at $90 a barrel. This is not an oil producer; it is a midstream pipeline, natural gas gathering company. For the most part they don’t care what the price of oil is. They have contracts and they care more about volume. In the meantime, they have had a record year. Raised their dividend twice this year. 3.9% dividend yield.

He ranks this as #1 in mid-streamers. Third-quarter report showed great growth with a variety of different things that took place, and all showed how management has been able to add value in a variety of different ways. They will be spending $700 million in CapX this year, so they are investing into what is a cyclical low. The types of projects they are getting are terrific having long-term contracts with AAA type of credits. Have been steadily increasing dividends from 2008. Great conservative balance sheet. Dividend yield of over 4.5%.

(Top Pick Nov 7/14, Down 9.21%) It is not so bad compared to the rest of the energy infrastructure sector. He still likes it. They did at least one acquisition of mid stream gathering systems. At this point in the cycle when banks squeeze credit, mid stream gather systems are one of the first things sold off. This is a sweet spot for them. He thinks they are in a very good place in terms of buying them. They have big prospects ahead of them. They are more affected by propane than gas prices. It is probably finding a base here. There is not much down side and lot of upside.

(Top Pick Dec 8/14, Up 4.12%) Because it is in energy he feels it has done okay. He thinks they can end up a winner in this downturn.

This is a pipeline, but also facilities. Has come off like the market, but also came off because it is affected by its customers who are energy producers. Not cheap and he would prefer Enbridge (ENB-T), because it has better dividend and earnings growth for the next 3-5 years. If you have a long enough time horizon, continue holding as it will probably go back higher with oil prices.

(A Top Pick July 14/15. Down 11.96%.) This tends to stay to the trend line. This is in a pretty decent Buy position even now. The best pipeline to own for people who don’t like oil.

He really only wanted one stock in the pipeline space, and the decision was Inter Pipeline (IPL-T). Keyera is still expensive. It has a great growth platform. If LNG is not built and there is too much gas, why do you really need this company?

This is in the transportation business. It pulled back in late 2014 with energy stocks, but didn’t deserve to. Hit its trend line and started moving up again with higher lows. A good entry point. Dividend yield of 3.25%.

One of the best management teams. They really own sort of the condensate, Fairway in particular, so that is one of the key products they have. One of the better managed companies and he thinks the dividend is safe. This does not take commodity risks, so its cash share shouldn’t be exposed to fluctuations in oil/gas pricing. It clearly has some negative impact from overall sentiment towards energy in general. One of the better places to hide within the sector.

Stock vs. Stock. KEY-T vs. IPL-T. Key-T is a more value added company that processes gas coming out of the ground. They have a big infrastructure which is a tremendous barrier to entry in that industry. They don’t have a great reliance on commodity process. They are a tolling operation. Prefers KEY-T to IPL-T.

He is positive on it. Management has done an exceptional job. This is a processing company and has always been a step ahead of everyone else. They take advantage of circumstances as they arise. A good long term hold.

On his radar screen for his income fund. If prepared to own it for a few years, then this is probably a great entry point. They collect and look after midstream assets. As long as you believe they are going to continue to pump energy out of the west and it increases at some point, then the company’s assets are just going to continue to improve. Great cash flow and a nice yield.

This is like an infrastructure play where they process gas, store it and transport it. All these companies have pulled back because of the decline in energy prices. She prefers others.