Parkland Fuel Corp (PKI.TO)

It is not an energy company. It is a smaller Couch-Tarde, passing energy through it convenience stores. It acts differently than a typical energy stock. The stock was cheap and it is now too late to buy it. He is actually looking at buying the bond instead, yielding 6%. Yield 2.9%.

It’s been on a tear. Really likes it. Terrifically well run. Argument for paying $40 is the multiple’s less than Couche-Tard. Argument for not paying $40 is it’s close to its all-time high. If gets back to mid-30s, they’ll be heavy buyers. Long-term hold, not a trade.

Bunch of gas stations throughout Canada. Thinks of them like Couche-Tard. Owns the bonds, not the stock. Dividend growth muted. Bond’s yielding around 6% right now.. If market collapses, you’re not going with it. Parkland stock is bond-like return with equity-like risk, and he prefers equity return with bond-like risk.

Small dividend. Very nice chart. Not a turnaround situation, earnings have been lining up. Earnings are coming out next week, so expect some volatility. Be careful if it drops to $34, and get out at $33. Yield is 3.3%. (Analysts’ price target is $37.79.)

This is an example of a company that pays a yield but has a positive correlation with interest rates. Companies in that category are more often industrial, discretionary, or REITs. They have pricing power and can raise prices with inflation. Parkland has good pricing momentum, good stability, but it is getting a little expensive (trades at 31x earnings). It pays a 3.5% yield and its payout ratio is a little higher than he likes. It is not overpriced relative to utilities or some other interest sensitives, but it is overpriced relative to companies like Chorus Aviation.

He sold it recently, based on a sale within Parkland based on leverage, and he's moving away from leveraged companies. The yield is safe and you can hold it for that, but it's a little too levered for his tastes.

It's a small-cap Couche-Tard based in the west. They picked up a refinery, which now looks smart, because oil prices have since risen. That said, he prefers Couche-Tard.

Higher oil prices may discourage people from driving which could pressure PKI since a large part of their business is running gas stations. That said, their margins are growing as they expand in scale from recent acquisitions.

Has a strong quarter. 28% earnings growth. 62% payout ratio. It is trading at a high value. He likes it. Balance sheet is OK. Not cheap.

They are in the fuel delivery and transportation business. They have some convenience stores. This is an established industry without much opportunity for organic growth. An investor might buy a company like this for growth by acquisition, with resulting synergies reducing costs. He would not pay up for it.

(A Top Pick March 23/17 - Up 2%.) One of the largest fuel distributers. They are in the acquisition business buying some gas stations. They bought recently assets from Chevron including a refinery. The outlook for them is good. Margins are up.

PKI-T vs. NPI-T. PKI-T has come up from a nice level. He was positive on the stock there and continues to be. It is a little rich now but has been a good dividend payer. NPI-T has not done as well recently. It could be interest rates. They are showing good growth and great cash flow. They have great wind farms coming on and it is just a case of whether it is Taiwan or further things in Europe. They need a partner to keep their cost of capital down.

Good company. They run gas stations and convenience stores in Canada. They made a meaningful acquisition in the last six months. Good income stream. Good growth. Probably a safe place in a choppy market.

Could be a good entry point. Hasn't reacted like the other stocks in the energy sector due to their retail side. Good to hold for the long-term. Stable cash flows compared to its peers. They've made astute acquisitions and blended them well into their exiting operations and expanded their geographic footprint. 4% yield.

(Market Call Minute.) Kind of a potential dividend company. Ranks OK in his model, but doesn't rank high enough and would prefer one of his 3 Top picks.