Eric Nuttall Athabasca Oil Sands Corp ATH-T PAST TOP PICK Sep 13, 2024

Great company, would recommend buying. Cyclical due to nature of oil prices, but strong assets. 

Correction over the past 2 months in price of oil and stocks. Price of oil has bounced back, but not the stocks. Now in a holding pattern, with support around $5.25 and resistance $5.75. He sold as he saw the correction unfold. In his universe, other energy stocks are more highly ranked right now.

Very well run, decades of inventory, debt free. Aggressively using free cashflow to buy back stock. A 3% weighting for him. Target price of about $7.

Proves the strong correlation between meaningful share buybacks and stock price performance. Not a $10 stock again, but sees $8.50 two years out.

Buy any dip. They will modestly grow production over 5 years and buy 68% of shares at the current oil price; at $80 they could almost privatize. At $70 oil in 5 years, they will free cash flow at the current share price. Has 50 years of stay-flat inventory. At flat oil, will go from 3.9x cash flow this year, 3.2x in 2026 and 0.3x in 2029.

No debt. Roughly $134M net cash. Business model is defendable down to $50 oil. Purish-play, oil sands name. Very clean story. Modest growth, 50+ years of stay-flat inventory. Residual free cashflow dollars are being used to buy back shares. In March alone, bought back 2% of shares outstanding. Management team is underestimated, has done a fantastic job. Gives you exposure to better days ahead for oil. No dividend.

Current oil prices in the low-$60s/high-$50s are attractive. Accumulated these stock during weakness, not when they rip higher. We won't see massive growth in oil. You can buy a tranche now.

Valuation is compelling, but offset by weak sector sentiment involving global macro economic concerns, tariffs, possible downturns. Trades at a very cheap 3x enterprise value over EBITDA, with 12% FCF yield. Watch the technicals and the macro trends for a turnaround.

Is benefiting from weakness in American shale. The Oil Sands have been overlooked for a long while; the Oil Sands have supply unlike much of the world which is and will face oil supply shortages. ATH has no debt. They will have over 50 years of stay-flat inventory. Have low or no growth, but will buy back as much as stock free cash flow allows. There is a take-put premium in the current share price. At $70 oil, this will trade at 11% free cash flow yield. He sees $80 oil in a year or more, but not for the next 9 months at least. Great managers.