TC Energy (TRP.TO)

They have a pipeline already that is improving deliverability into the Gulf. They have $30 billion worth of potential expansion. Nice stable revenue stream. 4% yield, which is growing.

Which pipeline company would you pick for a long-term hold? All his clients own TransCanada Corp (TRP-T) and some also own Enbridge (ENB-T). Enbridge has been the better performer in recent years. TransCanada has been hurt by the uncertainty over the Keystone XL. Because of its other projects and its got investments in the electricity business, TransCanada is a good long-term hold. Both of them are worth continuing to hold.

A great Buy at these levels. Expects their EBITDA’s to double between now and 2020, if they get all the regulatory approvals. Best in class company for contract duration and counter party risks. Still cheap, probably because of Keystone. Trade at about 8.4% pre-cash yield over 2014 estimates versus their peers at around 7.2%. 30% of revenues are in US$ which should be a bit of a power kicker for them as well.

2018 preferreds. It is a fine company, relatively safe. You are more exposed to interest rates than pipelines. It is low risk. You are going to get your dividend payment and your principle at maturity.

Just finished building a pipeline from Cushing Oklahoma. US reversed the flow of oil about 9 months ago, sending everything South and shipping it off shore. This company is going to benefit and will be transferring about 700,000 barrels a day, and eventually ramp up to 1.2 million. They are also participating in the Keystone.

(A Top Pick Dec 14/12. Up 7.39%.) Not the most attractive stock to be in right now. You have the tapering influence. Longer-term, for the more conservative investor, this is fine. You are going to have a lot of growth with all the infrastructure going on. As long as interest rates don’t shoot up too high, you’re going to be fine.

Prefers smaller pipelines that operate within certain provinces. This is a huge one which has a lot of political issues and red taping to go through when they are building pipelines across provinces and countries. Prefers Inter-Pipeline (IPL-T).

(Top Pick Nov 2/12, Up 9.35%) Has a great growth profile ahead of it. Keystone is not in the price because investors have given up. If it sells off for a day or two, then that is an opportunity.

Have done a really good job in the last couple years of diversifying away from Keystone. Pretty attractive slate of some small to medium-size projects. Just announced a deal with the LDCs in Eastern Canada, which help to alleviate some of the problems with the mainline. Valuation is attractive relative to its peers. Has the potential to see some strong, sustained growth in earnings and dividends. Yield of 3.9%.

A lot of pipelines are getting a little stretched. This one is cheap, trading at 8.6X 2014 free cash flow yield. They have so many projects going that even if Keystone doesn’t happen, there is not much downside for it at these levels.

Somewhat interest-rate sensitive as opposed to the very big energy midstream infrastructure companies. Prefers something like Inter Pipeline (IPL-T), which has a little bit higher growth. In general, energy infrastructure is a good investment. You will get above average dividend growth. There is a little bit of news risk in this and he would prefer Enbridge (ENB-T). (See Top Picks.)

A fine holding. Like any stock, what would he replace it with to get a similar yield. A ZWU-T has 6% and has a covered call overlay. That would be something to consider. Risks aren’t zero but an awfully nice yield and over the next couple of years TRP could get back up there.

(Market call Minute) Likes the company but there are better companies in the mid-streamers.

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.

Not aggressively buying utilities. Some attractive in terms of what they are working on. Maybe keystone gets approved but it won’t add much to the stock. Richly priced but you can do well elsewhere. He adds CU-T instead for new clients.