Q: What is keeping TOU at these prices? I would like to buy some shares but can't see its value at present gas prices. Is it that we are presently experiencing winter in North America. Should one chase the price or wait for a pull back? At what price would 5i feel is a good entry?
Thank you
Thank you
5i Research Answer:
Keep in mind TOU pays a 1.7% dividend and has paid four special dividends (total $5.50 per share) in the past year. So, when looking at returns, it is important to include these. It is up 4.8% this year. The sector remains mixed, but natural gas has had a good start to the year. TOU generates more than $2.6B in free cash flow annually and solid growth is still expected for 2024. We think $60 would be quite attractive. It is always difficult to time entry into a cyclical business, and we thus would be fine buying some today, as we would consider it one of the best-managed companies within the sector.