Beginning his career on Wall Street in 1938, Sir John Templeton pioneered the concept of internation...
The 1600 Alert: New Advisory Eyes Political Profits
03/27/2017 2:50 am EST
One investment area that has a good chance of support from both Republicans and Democrats is Trump’s call to spend $1 trillion to upgrade our roads and highways, bridges and airports, and other infrastructure in the United States and around the world.
Brookfield Infrastructure Partners LP (BIP) is a Toronto-based international firm that owns and operates utility, transport, energy and communications infrastructure businesses around the globe -- in Canada, Australia, Brazil and the United Kingdom, among others.
Returns are outstanding, with profit margins exceeding 17% and revenues rising 49% last year to $2.12 billion. Earnings soared to $276 million.
The firm has over $822 million in cash, plenty to finance its $8.4 billion in long-term debt and its quarterly dividend payout (nearly 5% yield). Its debt structure keeps the company's corporate debt to a minimal level.
BIP has a strong investment-grade credit rating, giving it ample access to low-cost capital to make acquisitions. Currently, the company has $4 billion of total liquidity, including a $2 billion corporate credit facility.
Since its inception in 2009, Brookfield has produced an 18% annual return to its investors, fueled by 22% compound annual growth in funds from operations (FFO) and a 12% compound annual increase in unit holder distributions.
BIP is selling for 18 times expected earnings this year, with a price/earnings to growth (PEG) ratio of 0.58. Anything less than 1 is considered an excellent undervalued play.
Brookfield Infrastructure Partners often ties into its parent company, Brookfield Asset Management (BAM), to keep its costs low.
That situation occurred when it participated in a deal to acquire a controlling stake in a Brazilian natural gas business from Petrobras (PBR) at a bargain price. Let’s buy BIP at market today and set a protective stop of $29 a share.
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