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  5. FRU: I am considering reducing energy positions and letting go one or more of these companies. [Freehold Royalties Ltd.]
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Q: I am considering reducing energy positions and letting go one or more of these companies. How do you rate them for fundamentals and any other metric you choose to rate them: Keyera, Pason Systems and Freehold Royalties. Sell order??
Asked by Maureen on January 22, 2024
5i Research Answer:

KEY is the largest of the names ($5.5B market cap) vs. FRU at $1.5B, and PSI at $0.9B. Both FRU and KEY offer similar yields, although over a longer period of time (10-years), KEY has slightly outperformed FRU. FRU has slightly better earnings estimates next year, stronger margins and metrics, a better free cash flow yield, and a cheaper valuation. Overall, we would give FRU the slight edge here over KEY. PSI is a smaller and riskier name, but we like its higher growth rates and better growth estimates for next year. 

While we like PSI and the other names mentioned, if one is looking to reduce risk and potential volatility, we would consider PSI to have the highest level of volatility (and lowest yield), ranking it first in the sell order, followed by KEY, and then FRU.