BMO's top stock picks - energy (G&M) BMO analyst Ben Pham highlighted upside potential in the dividend-heavy energy infrastructure stocks,
“The U.S. dollar’s strength has turned into an earnings and FCF/sh tailwind for the Cdn. Energy Infrastructure sector. Over the last few years, it has more or less been a translation headwind partially offsetting energy infrastructure expansion growth. The U.S. dollar has benefited from its safe haven status and the Fed’s aggressive tightening cycle, pushing the USD/CAD to 1.37 (approximately 8 per cent year-to-date) with expectations towards 1.40 in the near-term. EMA [Emera Inc.], ALA [Altagas Ltd.], ENB [Enbridge Inc.], TRP [TC Energy Corp.], and FTS [Fortis Inc.] are the most sensitive to upward estimate revisions (range of +4-12%) given their high proportion of earnings generated in the US (we are currently modelling 1.25 USD/CAD). This should partially offset the negative valuation impact from rising interest rates that we flagged last week in our 2024 roll[1]forward report.”