Arc Resources Ltd (ARX.TO)

Sold the last this morning. Great gas assets but technically the stock is breaking down here. Don’t fight the sector.

Cautious on a name like this because the price of natural gas in Canada today is much less than what many people perceive. This is because of the basis differential, the difference between natural gas prices in Alberta relative to other benchmarks and is very, very wide. Good management and the asset base is super quality but is trading at a very high multiple. He doesn’t believe in $5-$6 natural gas. He thinks it is capped at $4-$4.50 for many years to come, even with LNG.

(A Top Pick June 25/12. Up 40.88%.) Has pared this back a little bit but if he sees some weakness he will be adding back. If you don’t own, wait for a better price entry, about $17.

The 3 names she owns in energy are Arc Resources (ARX-T), Bonavista (BNP-T) and Crescent Point Energy (CPG-T). If she had to pick one that was more natural gas, it would be this one. Great operators and provides a yield in the low 5%. Good growth profile and visibility on how they are going to grow their production.

(Top Pick Jun 25/12, Up 48.13%) Has been a core holding for years. Tremendously well run company with a discipline for hedging gas prices and paying a sustainable dividend. Exciting resource behind this company and an inventory to last years. He will be scaling out of it as it has risen and will now be buying it back on a dip. He trades it. 60% gas / 40% oil.

Too expensive right now.

Healthy dividend. In last two or three years it was a laggard and then gas came back in favour and it went up. It is now fairly fully valued. Decent hold for the dividend but more growth in others. Prefers TOU-T.

(A Top Pick May 4/12. Up 38.59%.) This is one of the best managements in Alberta. Have a lot of gas liquids. Yield of 4.5%.

Only challenge he has with this is that it is perceived high-quality, and it is high-quality and you have to pay for that and he can’t stomach the multiple. Great asset base in the Montney both in dry and liquid gases. There are constant rumblings that they could be a takeout target. Already discounting a pretty high gas price. There are better opportunities in the natural gas market.

(Market call minute.) Great company. A little bit rich. Good dividend and very well run.

Solid dividend yield, mostly Nat Gas assets. He would not have a problem owning it.

Expensive stock with Price to Cash Flow at almost 11 times, but feels it is expensive for a reason. Company has a lengthy track record of very good capital allocation. Have a tremendous amount of inventory. Runs a conservative balance sheet and a sustainable payout ratio. Should be a core holding for anybody in oil and gas. 4.6% yield.

(A Top Pick Feb 17/12. Up 9.55%.) One of the smartest management’s that you’ll find in the gas industry. They emphasize the liquids part of their business.

(A Top Pick Feb 29/12. Up 4.66%.) This is doing most everything right. They are hedging, acquiring lands. Great long-term prospect.

Will trade off the natural gas contract, which will trade off weather but he is not interested in doing this. Natural gas is going to be a tough place to be for probably a lot of years until LNG exports are really a go. An off year for them with only 3% production growth. Excellent balance sheet. Diversifying out of dry gas into natural gas liquids. Believes they are hedged for 2013 so your dividend is safe. Would make it a core holding on pullbacks of natural gas.