Doom, Gloom, Buy: Analysts Talk Pipelines

Doom! Gloom! Buy!

That’s the message from analysts on pipelines. Sam Kanes, an analyst at Scotia Capital, reminded investors of recent scary comments made by U.S. Federal Reserve chairman Ben Bernanke before breaking out the good news.

Mr. Bernanke said:

The outlook for economic growth has worsened and that the downside risks to growth have increased. Economic activity is likely to be subdued during the remainder of the year and into next year.

But pipelines and energy utilities? You should buy those, the Scotia analyst said, holding the brokerages “overweight” call, but trimming price to earnings expectations.

The note said:

Since the economic worst is still to come, we maintain our overweight call on pipelines that we have held since August 1, and energy utilities since August 15.. Our bias returned to pipes due to Enbridge Inc.’s (ENB) C$9/share stock price correction from its peak to under C$37/share.

Over at Canaccord Adams, analysts were a bit more reserved. Enbridge Income Fund, part of the Enbridge family, was bumped to “hold” from “sell,” but with its target price chopped to C$8 from C$9.  Fort Chicago Energy Partners LP (FCGYF.PK) is now a “buy” in the eyes of Canaccord Adams, rather than a “hold.”  It, too, took a target price cut, dropping to C$9.50 from C$10.50.

Pembina Pipeline [TSX:PIF.UN] was boosted to “buy” from “hold,” with its target price now set at C$16.50, down from C$17.50. Inter Pipeline Fund [TSX:IPL.UN] retains its “buy” status, with its target price dropping to C$9.75 from C$10.25. (Congratulations, Inter Pipeline, on taking only a C$0.50 haircut while the others were cut down by a C$1).

Comments

[aSignals CEO:]

Buy & Hold just doesn't work...the market is proof of that. Don't let the market take you for a ride, follow a consistently profitable investment system. Investors should follow a hedged, strategic and disciplined system ... it takes work!

2008 Oct 09 09:37 PM