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Highest Quality Canadian Midstream / Pipeline

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  • Jun 16th, 2018 9:24 am
[OP]
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Nov 9, 2013
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Edmonton, AB

Highest Quality Canadian Midstream / Pipeline

Based on assets held, market position and quality of management, which would you guys vote for as the highest quality Canadian midstream company?
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Apr 23, 2009
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treva84 wrote:
Jun 13th, 2018 8:00 am
Based on assets held, market position and quality of management, which would you guys vote for as the highest quality Canadian midstream company?
Are you looking for confirmation? Smirking Face

You know the answer!

Jokes aside - your question is similar to asking which of big 5 banks is the best? Hard to say but I would say as far as wide moat and value is concerned, it’s ENB.

Since your question was about the ‘size’ (I.e. assets held), the answer is obvious.

Interesting question, nonetheless!
Sr. Member
Feb 26, 2017
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Of the ones I own I would pick KEY. Lowest leverage 2.3 Debt/Ebitda, low payout and well run. Mostly natural gas midstream instead of oil which is a benefit in the long run. They gave lots of projects coming online and should see good cash flow growth for the next couple of years.

My dad is a fan of PPL and he's got a pretty good track record in this space. I haven't seriously looked at them as I already own IPL and ENB.
[OP]
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Nov 9, 2013
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Edmonton, AB
ruchir wrote:
Jun 13th, 2018 8:32 am
Are you looking for confirmation? Smirking Face

You know the answer!

Jokes aside - your question is similar to asking which of big 5 banks is the best? Hard to say but I would say as far as wide moat and value is concerned, it’s ENB.

Since your question was about the ‘size’ (I.e. assets held), the answer is obvious.

Interesting question, nonetheless!
Haha no, not confirmation. My motives are selfish, however. I hold ENB but no other midstream companies. I think the sector is beat up and I've thought about buying TRP and I've looked at KEY and PPL as well.

Market cap wise obviously ENB is the biggest but I'm thinking more about management lately. I think the Spectra acquisition is probably beneficial in the long term but the roll up makes me question management. It's good for ENB shareholders but terrible for the sponsored vehicle shareholders (although maybe less so for ENF). If they would bend their sponsored vehicle shareholders over like this what could happen in the future to ENB shareholders?
Last edited by treva84 on Jun 13th, 2018 9:58 am, edited 2 times in total.
[OP]
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Nov 9, 2013
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Edmonton, AB
Chance7652 wrote:
Jun 13th, 2018 8:38 am
Of the ones I own I would pick KEY. Lowest leverage 2.3 Debt/Ebitda, low payout and well run. Mostly natural gas midstream instead of oil which is a benefit in the long run. They gave lots of projects coming online and should see good cash flow growth for the next couple of years.

My dad is a fan of PPL and he's got a pretty good track record in this space. I haven't seriously looked at them as I already own IPL and ENB.
Interestingly KEY came up in a positive way in an otherwise negative Globe and Mail article today talking about dividend stocks in a rising rate environment.

I've looked at PPL as well but the debt scares me away.
Sr. Member
Feb 26, 2017
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treva84 wrote:
Jun 13th, 2018 9:56 am
Interestingly KEY came up in a positive way in an otherwise negative Globe and Mail article today talking about dividend stocks in a rising rate environment.

I've looked at PPL as well but the debt scares me away.
KEY also is a bit more sensitive to commodity prices, which should be a benefit with the commodity prices going up. Most pipelines have long term take or pay contracts (customers pay even if they don't use the pipelines). KEY has less of these long term contracts which which gives them more flexibility to raise prices.

I like ENB a lot at its current price and have averaged down on ENB three times this year. I also view it as one of my riskier stocks and my likely plan is to sell about half my position when I see a price that is close to fair value.
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Apr 23, 2009
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Chance7652 wrote:
Jun 13th, 2018 11:48 am
KEY also is a bit more sensitive to commodity prices, which should be a benefit with the commodity prices going up. Most pipelines have long term take or pay contracts (customers pay even if they don't use the pipelines). KEY has less of these long term contracts which which gives them more flexibility to raise prices.

I like ENB a lot at its current price and have averaged down on ENB three times this year. I also view it as one of my riskier stocks and my likely plan is to sell about half my position when I see a price that is close to fair value.
Sell covered calls for half of the position in the meantime for the strike price you think is a fair value.
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Feb 26, 2017
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ruchir wrote:
Jun 13th, 2018 12:00 pm
Sell covered calls for half of the position in the meantime for the strike price you think is a fair value.
That actually make sense although I've never sold options. Can it be done in a RRSP account (I own it in my unregistered and registered account)?

I have $49 in mind as my sell price (I think 51 or 52 is probably a fair price for ENB). I don't think I would get anything selling a call for that price when its at 42.
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Jul 23, 2007
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I own ENB, IPL and TRP. I added more shares of ENB just a few weeks ago, but only because I like to keep the dollar value of equities balanced with each other as much as possible per sector.

Aside from a cursory glance at the Key Stats in Morningstar, I don't do any financial analysis.
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Jun 3, 2009
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Aside from pot and cryptos, ENB is the probably the most discussed stock here.
I personally do prefer PPL though.
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Chance7652 wrote:
Jun 13th, 2018 12:24 pm

That actually make sense although I've never sold options. Can it be done in a RRSP account (I own it in my unregistered and registered account)?

I have $49 in mind as my sell price (I think 51 or 52 is probably a fair price for ENB). I don't think I would get anything selling a call for that price when its at 42.
I have always done this in my non-registered account so don’t know. But I don’t see why you can’t do it in RRSP account as long as you are fully funded if selling puts. I don’t see any issue in selling covered calls as you are fully covered.

The only time your broker should have an issue is when you are selling puts. So as a simple thumb rule, all types of option trades s/b ok in RRSP except selling puts.

However, you will need your broker to allow you to trade options in RRSP. Call your broker, I would say.

It is a common practice in US for brokers to allow options trading in Roth accounts (or whatever it is called).
[OP]
Deal Addict
Nov 9, 2013
2422 posts
1065 upvotes
Edmonton, AB
Chance7652 wrote:
Jun 13th, 2018 8:38 am
Of the ones I own I would pick KEY. Lowest leverage 2.3 Debt/Ebitda, low payout and well run. Mostly natural gas midstream instead of oil which is a benefit in the long run. They gave lots of projects coming online and should see good cash flow growth for the next couple of years.
Reading their Q1 2018 report it looks like ~ 90% of their revenue is commodity ("Marketing", "Gathering and Processing" Segments) while the other 10% is contract based ("Liquids Infrastructure").

It looks like their operating margin varies from high single digit to low double digit. It looks like their net margins is up and down in high single digits.

Do you know who their competitors in this space would be? I'm curious what their margins are.
Sr. Member
Feb 26, 2017
748 posts
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treva84 wrote:
Jun 13th, 2018 10:03 pm
Reading their Q1 2018 report it looks like ~ 90% of their revenue is commodity ("Marketing", "Gathering and Processing" Segments) while the other 10% is contract based ("Liquids Infrastructure").

It looks like their operating margin varies from high single digit to low double digit. It looks like their net margins is up and down in high single digits.

Do you know who their competitors in this space would be? I'm curious what their margins are.
IPL does some gas processing after they bought assets from Williams. I think ENB has some midstream assets left in Canada (they are likely to sell them).

Maybe try looking up some of the names from this article. Its a pretty comprehensive list US/Canada pipelines and midstream companies.

https://seekingalpha.com/article/418058 ... -midstream
[OP]
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Nov 9, 2013
2422 posts
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Edmonton, AB
Chance7652 wrote:
Jun 13th, 2018 11:19 pm
IPL does some gas processing after they bought assets from Williams. I think ENB has some midstream assets left in Canada (they are likely to sell them).

Maybe try looking up some of the names from this article. Its a pretty comprehensive list US/Canada pipelines and midstream companies.

https://seekingalpha.com/article/418058 ... -midstream
Thanks for sharing. Interestingly I have never come across GEI before.
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Dec 21, 2005
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Altagas? Or is that too much of an utility play?
:idea: :) :lol: :razz: :D

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