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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Peter and His Wonder Team
BDI just reported a good quarter. The stock has moved to new highs. They seem to be doing very well in the recent past. However I am wondering how far can they go. I am up and wondering if I should just lock in my profits and be happy. Please give your thoughts on there future prospects. Thank you...your analysis is always helpful.
Read Answer Asked by Ernest on March 06, 2023
Q: Robert Gill of Goodreid Investment Counsel had a bullish opinion on TC Energy in today's Globe. Recent opinions on TRP from 5i are less bullish. Do Gill's opinion or numbers do anything to change your opinion? ENB is my long term hold in the sector,  TRP would be a 'clip the coupon  while awaiting some reversion to mean on the share price' type holding.  
A related question: With these high debt utility type stocks, how great are the risks we go into multi year period of higher interest rates? 
Thank You.
Read Answer Asked by Tim on March 06, 2023
Q: In a response to Chris on February 27th, you indicated OBE was OK but you thought TVE was better. I am curious what brought you to that conclusion. Maybe I get too caught up in simple metrics. For example, OBE has a PE of 1.0 and a PB of 0.52 compared to TBE where the same ratios are 4.3 and 1.3. I realize it is not as simple as that. I hope you can educate me on how to dig deeper into your preference for TVE. Thanks again for helping the little person.
Read Answer Asked by Danny-boy on March 03, 2023
Q: I have held ALA for many years, I have some cash to deploy in the account holding ALA. All my other holdings in that account have bounced to start 2023 with ALA the glaring exception who lost steam and gave back its gains. Good time to buy the dip on ALA and worst case I get the 3.7% div for the rest of 2023? You don't seem to be huge fans based on replies to other ALA questions. I don't see a huge downside if markets continue to be shaky and with the interest rate hike cycle hopefully nearing an end.
Read Answer Asked by Tom on March 03, 2023
Q: Hi, I think, my question may have been lost due to time out. Capital Power has been bit of a disappointment, since we took a full 5% position with ACB of $50, in mid 2022. After reaching a high of $52-53, stock has been languishing around $41-$43 and does not seem to get any traction. I am aware that valuations in Utilities sector have been impacted, due to likelihood of higher interest rates for longer. But, CPX share price has lagged almost 10% more than its peers like FTS. Recent results also failed to inspire any confidence. Analysts are predicting lower power prices in Alberta, through 2024. Dividend yield of 4.75% seems to be the only solace.

Do you see any catalyst which could help recover stock price, over near term ? Or, it would make sense to take a capital loss (in taxable account) and reallocate funds to another sector ( e.g., Industrials - ATS/TFII ), which appears to have some tailwind. We also have a 6% position in FTS, in utilities sector and are underweight Industrials.

Thank You
Read Answer Asked by rajeev on March 02, 2023
Q: I want to re-visit a question I asked previously (based on Eric Nuttall's appearance on BNN Bloomberg) and Lionel's input on it. I've reproduced those questions and answers below for reference.

To clarify, Eric was not bullish on natural gas, at least over the next year. What he was feverish on was heavy oil, and his top picks were the three companies above.

I had mentioned Tourmaline Oil which perhaps shifted the conversation toward natural gas, but I was really interested in your take on the heavy oil companies.

Do you share his enthusiasm about heavy oil? I'd appreciate if you could rank these companies. CVE seems the biggest but I sense he sees more potential in the other two which are smaller.



Q: Eric Nuttall was very bullish, almost feverish, on oil (represented by the companies above) while being down on natural gas. To what extent do you agree?

Asked by Kevin on February 27, 2023
5I RESEARCH ANSWER:
We like Eric and used to work right beside him (Peter answering). He is bright and gained lots of experience over the past 20 years. He showed a lot of guts in the oil crash when his fund dropped 70% in three months and fell to $20M in assets (he now manages more than $2B). The sector is very cheap, and vs past cycles corporate balance sheets are very strong. Certainly the lack of spending may results in higher prices over the next three years (depending on the economy). But...it will always be cyclical. The price of oil in fact is even down 14% from before the Ukraine war started. But we think some sector representation certainly makes sense. The TSX is currently at 17.4% energy. We might consider that a bit on the high side. In terms of natural gas, it can be very weather dependent, but we would be more bullish than Eric; the price has dropped so much this year, but it is also dependent on drilling, and the price drop is going to cause even less spending to be done on new gas wells.

Q: I am optomistic that Peter and Eric Nuttall are bullish on the gas sector, as in the 5i reply to Kevin's query (Feb 27). What are your views on XES? Technically, it looks like it has a huge runway to the upside ...Thanks....Lionel

5I RESEARCH ANSWER:
XES is the SPDR Oil and Gas Equipment & Services ETF. Certainly there is upside potential as oil and gas companies spend. However, there has been a trend in the industry towards dividends and buybacks, so spending this cycle may be less than in other periods. Still, the fund is up 38% in the past year, and its 35 holdings look solid. We would be OK owning this for sector exposure, with the understanding that it is always going to be cyclical.
Read Answer Asked by Kevin on March 02, 2023
Q: Hi, Could you please comment on the quarterly/annual results released today., which appears to be strong. Company also seems to be committing to regular and special dividends through 2024, and returning 50-90% of FCF to shareholders !! Sweat !!! There has been so much pessimism about TOU and NG producers, recently. Do you expect the stock to recover and see better price action, over next 12-18 months ? Thanks
Read Answer Asked by rajeev on March 01, 2023
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