Bill Cara: BMO thinks Trap is so-so, Mon., May 1, 2006, 9:27 PM

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May 1, 2006

BMO thinks Trap is so-so, Mon., May 1, 2006, 9:27 PM

Earlier I gave you some insights into TransCanada Corp, which is basically a pipeline (gas transmission) utility with interests in nuclear and LNG, all of which I like. If the margins were a little higher, TRP would be in the Cara 100, but I like the company nonetheless.

Needless to say, timing the purchase is important. But with a solid dividend (about 3.75 pct), if interest rates would stay low, I'd buy this stock right now. TRP dropped -1.0 pct today to C$32.70 (US$29.38 on the NYSE). A few more days like that and this stock will look good for a conservative account.

Download BMO file on TRP

I don't mind the new BMO C$34.50 target for TRP. You see, this is a stock that I like to write to overwrite. Sell calls when it gets pricey, and write puts when it gets cheap. And every few years " after a crash in the market " load up the truck as Cramer likes to say.

I assure you; you stick with that kind of strategy and this kind of stock and over the years " I laugh when I say this, but it's so true " you (Mom & Pop) will beat 80 to 90 percent of all investment managers for the hedge funds.

Besides, I think the 12 month target should be about C$37 (which, by the time we get there, just might be US$37 " but that's even better for Americans who want to hedge their Dollar with a piece of a solid US$14.2 billion company just north of the border).

The only time you don't want to hold a stock like this is when interest rates go through the roof because they carry lots of debt. For example, with rates shooting up and bonds getting crushed today, the utility ETF's XLU and VPU also sank about -0.9 pct.

Anyway, while I don't like utilities for that reason right now " even gas pipelines " the sector is typically the first one to bottom out in a bear market, so keep your powder dry. Get ready to write puts and maybe even buy some calls or the stock -- when everybody else tells you they hate these stocks.

Btw, I did note to American traders who are concerned about the falling trend of the $USD, a long term investment hold in a good quality Canadian stock is likely to have enhanced performance on account of the rising Canadian Dollar.

Posted by Posted by Bill Cara on May 1, 2006 09:27:12 PM | Category: 55 Utilities , Canada

Discourse

Bill, I've found in the past keeping my powder dry on your suggestions has always found me looking into the sky wishing I had moved sooner.
Yesterday I bought TRP at it's closing price and have learned from past selections found here not to look back. A good example would be: GCHA, was $0.125 now $0.25 and how about USGL, was $5.76 now $9.39.

Thanks Bill and the other great folks here that have helped a very 'Little People' guy.

Posted by: C.Note at May 2, 2006 7:09 AM [link]

C.Note,

There is a huge difference between Rob McEwen's USGC and TransCanada TRP. One is a penny stock gold exploration company -- albeit the one I probably like best (especially after I got to see the amalgamations Rob did) -- and the other is a $14 billion utility that would possibly appeal to conservative investors.

I intend to write more for the readers who are conservative/value oriented because they must be getting sick of my focus on gold. Two years ago I wrote that I was fearful of turning my blog into just another one on gold but by 25-30 year experience I could see it happening because of what I saw going on in markets.

Don't you find it appalling that every blogger today is an expert in gold? I saw it coming. I also know that 9 of 10 so-called PM experts you see on TV or read in their blogs are clueless.

Another point is that very few of the senior management of the gold miners and prospectors are knowledgeable about gold markets. Lassonde and McEwen are two that are, but most are experts at running companies. They know how to raise capital, acquire properties, manage drill programs, disseminate results, etc. But they don't follow the gold market as closely as many of my readers.

Back to TRP: I gave readers enough research from two quality research sources plus sufficient other links (advfn, investertech, etc), that you ought to be able to see whether this one appeals to you or not.

As a writer, I'm not trying to tell anybody to buy or sell anything.

Posted by: Bill Cara at May 2, 2006 7:29 AM [link]

Bill:
Believe me, I did study the research you and others provided on TRP, thank you. I liked the Bruce aspect, and if they win the pipeline proposal with COP, I'll not only have a conservative stock but be rigtht in the thick of CA Oil Sands.

And to all, Bill did not tell me, or anybody else, to buy anything, the research did...and these trains leave the station quickly.

Posted by: C.Note at May 2, 2006 8:55 AM [link]

C.Note,

I'm glad you did the research. In time I should get better organized around the Cara 100, and will even make it a Cara 200 or 300. It's just a matter of having the time to do this.

But you know, last month my web stats dropped (about 8 pct) for the first time since I started this blog, so I figure that maybe I've done what I can do, and leave it at that.

Time is very valuable and I said that I would contribute mine to the public as long as the web stats were growing. So I'll give this another two or three months to see if I have gone off-track somewhere.

Posted by: Bill Cara at May 2, 2006 9:14 AM [link]