Cardinal Energy Ltd (CJ.TO)

This looks cheap and is attractive here, but wouldn’t go too heavily into it.

He is short this one. It has poor price momentum. It is expensive. It pays a good yield, but the cash flows don’t support it.

At current oil levels the dividend is safe. Their operating costs are about $20/barrel. With operating costs this high the impact is higher than with other players. She believes we are seeing a bottoming in oil prices and that there is a good fundamental picture, so thinks this company makes sense right now.

(Top Pick Apr 7/16, Down 14.4%) It was pummeled this year. He can’t bring himself to sell it. They are at a 4.3 times. They have a reserve life of 7.4 years. That means you are getting half the reserves for free.

Year-over-year cash flow was down 42% in November. However, earnings estimates have gone up by 20% in the last 90 days. Expected to lose $.13 in earnings this year, and $.02 next year. Forecasted as having $1.76 of cash flow for 2018 and $1.21 in 2017. If there is a rise in oil prices, this looks like a reasonable expectation.

In the next month energy could be presenting a good buying opportunity. It has broken a downtrend and is base building. It is ready to rip out of that zone. The support should hold. Take a half position on weakness.

(Market Call Minute.) Probably a good buy at this point. It is probably off 20% from its highs. A light oil producer and pays a decent distribution.

(A Top Pick Feb 23/16. Up 40.98%.) This remains a core holding for him, and he is still buying. He is looking for 87% upside.

This is his largest energy holding. An oily play in Western Canada. Conservative management and excellent balance sheet. All the things you want if you think it is an uncertain world in oil. Yield of almost 5%. A nice place to have some yield as well as some oily exposure. A good safety play with some oil aspects to it.

This has a reasonable yield, and he was looking for situation that had enough yield but with enough growth to give something extra. It has a very low decline rate, which means they don’t have to pump a lot of capital in the ground to keep their decline rate going. They are very good operators. It has an immaculate balance sheet, with very low debt. If the price of crude goes up even $5-$10, they will be big beneficiaries. Also the market cap is under $1 billion. When it gets to $1 billion, a lot of funds will buy it, giving it an extra kick. Dividend yield of 4.11%. (Analysts’ price target is $11.83.)

Feels the dividend is safe, because they have never had a payout ratio that was getting anywhere close to their cash flow level. The company is ready, poised and able to expand, based on internal capital spending and acquisitions. A good place to be. Dividend yield of 4.17%.

About 80% of their oil is medium gravity, so they get a discount to Edmonton light. If you are a believer like he is, that oil prices will gravitate to around $60 next year, you get really good product leverage without the financial leverage. They have some drilling catalysts coming up, where they are going after 2 different properties. They bought a great little asset from Penn West (PWT-T) and are going to use modern technology in a field that hasn’t had any of this application ever before. There could be virgin reservoir pressure. This company still trades at a discount because of stupid lingering concerns because of an environment liability, but they have been improving it. He is looking for a $15 share price.

Had owned this when oil prices were a little higher, but moved out when prices declined. He prefers larger companies now. This one doesn’t screen super well from either a fundamental or technical standpoint. Also, prefers natural gas names more at this time.

(Market Call Minute.) Has not traded as well as everybody else because their oil is little bit heavier and costs are higher. That has created a lot of selling whenever prices have gone down, but the optionality is huge. Solid company, solid management and a solid balance sheet.

He likes this, because it is still trading at a discount multiple, relative to some of its peers. It has a stronger than average balance sheet, lower than average decline rate, better than average properties and the ability at a higher oil price. 80% of their oil gets sold at a discount to light oil, because it is medium gravity and the product leverage to a rise in the oil price is that much more magnified. He could see this at $15 in 2 years.