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May 30, 2006

Western Canadian oil and the pipelines they need, Tues., May 30, 2006, 6:20 PM

My Cara 100 list is comprised of 10 sector 10 energy companies, all of them major oil & gas producers (including three from Western Canada), but no pipelines " not even in the sector 55 utilities.

But the Western Canada oil sands need pipelines, and Enbridge (TSX and NYSE: ENB) is my favorite. I see that BMO Nesbitt likes them too.

Here is their May 24 industry report. There is a lot of excellent data in here; I hope you read it. Download BMO report on Pipelines & Utilities.

GICS 55 Enbridge Inc. (USA) (ENB) (ENB) Financial Data

ENB is in a long-term uptrend. The problem for me is that the price might have to come back down on an intermediate-term cycle pull-back to say US$26. It just spiked up from US$28.25 to $30.50, presumably because it is a fairly safe bet in dangerous waters.

But if I have to hold onto ENB for quite a while, I'd like to have a 4 pct divdend yield, which is far higher than it pays out on today's price.
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Posted by Posted by Bill Cara on May 30, 2006 06:20:02 PM | Category: 55 Utilities

Discourse

Well Bill, THAT'S A FIRST!

I was working while CNBC and Craemer were on in the background. He just recommended ENB as the pipeline play. Bill first and then Craemer about an hour later---maybe he's checking your site! (LOL)

Agree with the pipeline idea, but I think I'll hold off for now. It was already on my watchlist.

Posted by: Seamus [TypeKey Profile Page] at May 30, 2006 7:41 PM [link]

Seamus, thanks for mentioning that... I was afraid I was getting my gurus mixed up.

ENB is up AH 2% above the Cramer close, as per usual; not quite enough to short, as per usual :)

It is just practice but I have fun shorting his lower priced recs. I call them my Bar Tab trades because that is all I make on them -- enough for a meal and a few beers. I swear I have about a 90% win/loss rate.

Posted by: Juker [TypeKey Profile Page] at May 30, 2006 8:11 PM [link]

Bill:
What about Pembina Income Trust, which is an oil sands pipeline play and pays a fat 7% dividend?

Posted by: beisman69 [TypeKey Profile Page] at May 30, 2006 10:00 PM [link]

beisman69,

Pembina I.T. 7% dividend is great if you like the idea of getting a good part of your "dividend" being a return of capital. Mr Ponzi would no doubt recommend this. I would read the prospectus before buying any income trust that offers a high "yield".

Posted by: TerryC [TypeKey Profile Page] at May 30, 2006 10:13 PM [link]

Juker

I believe your win/loss in those "bar tab" Craemer trades. I had a junior speculative miner play in EZM for 6-8 weeks, when I found out Craemer had just recomended it the night before. I checked the weekly, daily and hourly RSIs and they all were in the high 80's if not 90. Sold that day (+68%) and it hasn't been back to that level since.

Posted by: Seamus [TypeKey Profile Page] at May 30, 2006 10:51 PM [link]

TerryC
All dividends are a return of capital. What's the point? If the share price remains stable, which Pembina has, you're earning 7% on your money. Not too shabby.

Posted by: beisman69 [TypeKey Profile Page] at May 30, 2006 10:56 PM [link]

The question is where do the 7% come from then?

Posted by: ursus [TypeKey Profile Page] at May 31, 2006 9:04 AM [link]