Getting a pipeline approved these days is a little more difficult than it used to be. In Canada, the debates about Keystone, TransMountain, and Energy East have all been a focal point for national divisiveness. In this article, I have no plan of entering into more debate. I do want to analyze what investors think about pipeline companies right now.
This is the third article in a series about a 1700 Kilometre (over 1000 miles) road trip that I did a week ago. You can follow these links to the first two articles.
Canadian Transportation Companies Start My Tour
Canadian Forestry Companies Under Review
I'll start with Pembina Pipelines. I was driving through the Montney area as we passed a few of their tank farms. Here is a link to the most recent Pembina presentation.
Pembina Pipelines (PPL.TO) has rebounded nicely from the January lows. The SCTR has been above 75 for three months but the price is nearing a big resistance level shown in red near $40. The P/E ratio is shockingly high as the market is expecting new services but the dividend yield is around 5 %. At this point the MACD is flattening out in positive territory. The 10 WMA has been important support shown in blue.
Enbridge (ENB.TO) is one of Canada's largest pipeline companies. While they have lots of upcoming proposals, they operate a massive network. Enbridge Network Map. Part of their existing network goes through the area we drove through. The Northern Gateway proposal would also be through that area as well.
The Enbridge chart looks similar to the Pembina chart above. The SCTR ranking is lower than Pembina and has really been a stock with an SCTR in the middle of the range. No real outperformance either way. The stock is hitting a $56 resistance level. The yield is around 4 %.
Inter Pipeline (IPL.TO) does not service the Montney area where Pembina and Enbridge have connections. They run a pipeline North/South between Calgary and Edmonton and the have some major connections into the Oilsands. Here is the Inter Pipeline network map. The stock chart shows a yield of 5.73 %. The SCTR is hovering around 75, but the price action looks very similar to Pembina and Enbridge. We can also see a horizontal resistance line at $28. A flattening MACD is also showing up. That makes three very similar oil pipeline charts.
One of the major pipeline routes in Canada that has been trying to expand is the Kinder Morgan pipeline called Transmountain. This might be an appropriate time to look at Kinder Morgan (KMI).
KMI's SCTR shot up above the 75 level this week. The yield is small at 2.38 % and the P/E ratio is huge. Kinder Morgan has been trending sideways for 6 months but the candle from this week shows a massive breakout. The volume was the best in four months. This is an attractive breakout.
There are four more Canadian pipeline companies to review that I'll cover off in the next article complete with a summary.
Good trading,
Greg Schnell, CMT, MFTA
