Arc Resources Ltd (ARX.TO)

Stock's down on pullback in oil and gas prices. But also rumours that Attachie well performance is not as strong as thought (but still at a healthy level). Fantastic company, but he prefers WCP and its management team. Given the pullback, you'll probably do OK.

Still a cyclical industry. Can't wave a magic wand and get the price of nat gas to pop. Still, too many tailwinds for pricing not to firm up. ARX will be a big beneficiary. FCF projections are very high, in mid-teen % range. Lots of demand for energy, and nuclear can't be built out fast enough to support it.

Her favourite natural gas name. Focusing more on liquid natural gas, condensate. Lots of embedded growth due to huge (15-year) reserves in the Montney. Stock's down due to Attachie project delays. As a long-term investor, she's not fussed if something gets delayed by 1 or 2 quarters. These are premium assets. Confidence in management. 

As we see more egress with LNG Canada and higher power demand, nat gas prices should improve, and it will have optionality to bring more production online. 100% of free cashflow is being returned to shareholders via dividends and buybacks. Yield is 2.87%.

Natural gas is a funny commodity -- price movements are so erratic. Domestic market can move 5-10% in a day. LNG is trying to create a global market. 

Chart shows corrective phase last 6 months. Broke recently, but don't read too much into that because it has a lot of support in the $24 range. Might go as low as $20. Whole sector's starting to look quite interesting. See his Top Picks.

Prefers Arc over Tourmaline. Arc did a great buy of Seven Generations years ago and are migrating a little to light oil, better growth potential and a much lower valuation. A natural gas play makes more sense than oil now. Is slightly bearish oil with OPEC adding more production (expects oil to break $60). Has sold out of all the productions to buy energy infrastructure.

Temperatures are starting to moderate, and nat gas prices are down. Overproduction in US. Ramp-up of LNG Canada slower than expected, but should be picking up. 

She's actually buying more of this one for clients, not trimming. Embedded growth via inventory through reserves. Likes that a lot of its prices are hedged to higher international gas prices (instead of Canadian). Doesn't need to acquire to fund growth, whereas TOU does.

If she were going to own 2 names, she would also own TOU. But she doesn't. ARX is first in the pecking order. If you have the patience perhaps hold onto TOU a bit longer, as we are getting into the colder months.

(Note the short timeframe.)  He even bought a bit more. Hasn't broken key support levels; so as long as it doesn't, he's OK. Nat gas demand for AI is huge. There's also cloud computing, population growth, and general energy usage. Lots of reasons that nat gas has a future, but near term it's subject to trading swings.

Check out his blog for the story on natural gas, and ARX is part of that story.

Weakness in gas price over the summer and with condensate prices (which are tied to oil production). Stepping in here for new clients or for those who want more. Likes the steady and methodical management team. Does acquire, but main focus is organic growth.

One of the top beneficiaries of the LNG market. Just started shipping overseas, and this will grow over time. Improving ROC last couple of quarters. Valuation is 6.4x EV/EBITDA, not worrisome. If you believe in LNG, this is your go-to name.

3-year CAGR is 17%, 1-year is 21% including dividends. Yield is 2.7%, low payout ratio, dividend is growing.

Price of nat gas should improve because of demand. Lots more energy needed for data centres. CEO gets full credit for improving growth over the past 5 years; got rid of debt, ramped up production, initiated share buybacks. Led by a strong CEO, can continue to do well going forward.

Near the bottom of a trading pattern. Uptrend. Hitting a bit of resistance, but touching the longer-term trendline. The lows are getting higher, nothing's breaking down. He just added another 2% to his position. Decent dividend yield of 2.82%.

He'd skew toward this one. Best-run intermediate O&G company in Canada. On most fundamental metrics, WCP is cheaper. It depends on your own investing style. He's often willing to pay up for management that he considers superior. In a 5-10 year timeframe, you can't go wrong with either.

Nat gas prices will go up, based on European demand for Canadian gas. Is a long-term play. Is the best in this group. Has made money for him in recent years. Is one of his few long-term holds.

He focuses on the top third of relative price performers in a group. The best companies tend to keep getting better. Good dividend plus dividend growth.

He's sort of like an inventory manager with the 20-30 stocks in client portfolios. His job is to own inventory that people care about today. He focuses on themes that he thinks are in the process of being revalued favourably, and perhaps in sectors that are less owned but showing something changing for the better. He's looking for the best company he can find, with no fundamental risks if it doesn't happen immediately, but where the multiple will start to expand if people look more closely at the group.

Leading Montney operator and low-price producer for natural gas. Great balance sheet, especially important because he thinks financing costs are going to keep rising. Great 3-year dividend growth of over 35%. Catalyst is the opening up of the LNG markets globally. Another positive change is the ramping up of Attachie over the next 4 years. Demand for power will fuel demand for nat gas. Rising price for nat gas + increased multiple could = significantly higher share price. Yield is 2.58%.