Summer Sale
50% off Premium Yearly
Opinions Richard Croft
TC EnergyTRP.TOCOMMENTOct 10, 2013
Richard CroftStock price when the opinion was issued
As of Jun 22, 2026. Market Open.
You might be interested:
Believes prospects for business are bright. Oligopoly with hard to replicate assets. However, lots of Capex with debt levels sensitive to interest rates. Expect steady dividend yield. Long term off-take agreements good for steady revenue stream. "Toll booth" style business good for defensive investors. If interest rates fall, also good for business.
Buy at current levels. Good exposure to growth in natural gas demand, with natural gas egress in western Canada. Company split will probably eventually be well received -- the asset is fully contracted for 2 decades, predictable cashflows. Discount to peers. Yield is 7%, solid.
Ryan BushellTRP plans to spin off its liquids division, TC Energy Liquid Corp., South Bow. Under the proposed spinoff, TC Energy shareholders will retain their current ownership in TC Energy's common shares and receive a pro-rata allocation of common shares in the new Liquids Pipelines Company, South Bow. The spin off will be tax free to Canadians. Full details are still not available, but we believe it is the right move for the company. Dividends (total) will stay the same and should continue to grow at both companies. We would, for now, suggest keeping both, unless and until new information becomes available. There is still plenty of time here before the split closes.
Unlock Premium - Try 5i Free
Coastal GasLink on schedule and on budget, set to deliver gas by end of fiscal 2023. This should be a de-risking event for them. Pretty cheap at 11x 2024. Asset sales should help de-risk. Really good dividend, good price, OK catalysts. Not a lot of growth. Will work at these levels, with interest rates coming down. His pecking order is ALA, ENB, and then TRP.
His large-cap, Canadian energy exposure. Good valuation, yield is higher than ENB.
Brian Madden
The outlook is good with increased profit guidance and the company's confidence in reducing debt levels by the end of next year. It has a 7.2% yield and can grow its dividends by 3 to 5% a year. if there are rate cuts next year this would be good for high dividend payers such as pipelines.
Buy 10 Hold 10 Sell 2
Teal LindeTRP currently has a high debt load, with a net debt of and net debt/EBITDA reaching 8.2x, which is high compared to peers and to TRP’s historical range as well. The total capex is also quite high, estimated to be around $12B, which accounts all the operating cash flow. This is very common for the sector, though, and TRP is not unique here.
The encouraging news is that TRP is accelerating the deleveraging process by divesting $5+ billion in assets as recently TRP completed the sale of 40% of a non-controlling equity interest.
Overall, we don’t like too much debt, but cash flow is stable and the business is regulated. We consider it 'OK' for income but do prefer ENB and PPL.
Unlock Premium - Try 5i Free
No insight on any lawsuit, but sounds political. US elections are next year, so we'll see. Lagged the group because of Coastal GasLink cost overruns, which should be behind them next year. Pipelines as a group are attractive for income. Yield's probably over 7%. She owns ENB, yielding over 7%, and PPL with a yield of over 6%.
They're Coastal Gaslink is nearly down and will break off the company into two which will be more focussed, and one will attract ESG investors. Also are shedding non-core assets. The stock has been under a dark cloud, but this sets this up nicely for future returns.
Brian MaddenRe-evaluating strategy. Asset sale proceeds used to pay down debt. Coastal GasLink will help move product. Dividend is nice to have in your portfolio. 89% of debt is fixed rate, and average maturity is 18 years, so well insulated from impact of higher rates. Yield is 7.57%.
(Analysts’ price target is $52.51)
Management has shored up the balance sheet. Assets cannot be replaced--it's very hard to build a pipeline from scratch, so they enjoy a moat. Trades at only 10x PE and pays an 8% dividend yield.
(Analysts’ price target is $52.50)
Robert Gill
In the event of Keystone getting approved or rejected, is it a worthwhile strategy to take a straddle position 9 months down the road? A straddle involves buying a Call Option and you will make money if the stock goes up. This also involves buying a Put Option, which will make money if the stock goes down. When you are buying both of these, you don’t care which direction the stock goes. You simply believe that it will go a greater distance than the cost of both of the options. 9 months out, you add the price of the Call and the Put to the strike price that you are willing to buy or sell the stock. That will be the trading range implied by the options. If you think the stock will reach either end of that range, based on the outcome of Keystone, then by all means, do the straddle. Your maximum risk is that it closes exactly at the midpoint, in which case both the Call and the Put will expire worthless. Chances of this happening are very small.