Opinions
Bill Harris, CFA
Canadian Natural Rsrcs
CNQ-T
BUY
Jul 10, 2025
Stock price when the opinion was issued
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Definitely don't sell. If you have extra funds, buy more. Happy to buy around low $40s. Premium assets, lower decline rate. Nice mix of oil and gas. Premium management team, one of the best in the world. FCF returned to shareholders via buybacks, consistent dividend increases. Another one to own forever. Has never cut the dividend, now 5.5%.
It has light and heavy oil as well as natural gas and LNG so it can switch around to what's going well and follow the increase in price of the particular commodity. It is the most diversified in Canada so is the one to buy. One of the cheaper at 12X earnings. It is a solid long term performer and has raised its dividend each year for 25 years. On oil in general OPEC has been putting more barrels on the market.
Premium contentOne of the best-managed Canadian companies that exist. Attractive today, mainly because we don't need a huge breakout in oil prices to deliver a decent return. WTI is sitting ~$61-62. Best consolidator in the basin. Core part of your energy allocation, though not quite a screaming buy today.
Highest beta to oil price, as it's the least vertically integrated of the seniors. Top-notch management. Very strong FCF. Solid balance sheet. Great yield. Chart's flat over last year, much due to lack of differentiating catalysts (unlike SU or CVE). Low oil price has impacted ability to hit internal debt targets or increase share buybacks.
Steadily climbing to first resistance around the key level of $45, which is a "reversal of polarity" (support becomes resistance, resistance becomes support). Good news is that it's broken out of downtrend. Much stronger technically. Watch: does it break out above $45? If yes, starts to look really good.
A couple of years ago energy was the place you had to be, and stocks have been sliding since then. Tariffs are slowing things down and gumming up global supply chains. OPEC wants to increase production. With the oil price where it is, there isn't a lot of drilling going on.
There's too much oil right now going into the fall, but oil has a way of tightening itself up. If oil stays lower for longer, there's more drive to get that price higher later. This is the stock in Canada you want to own for sector exposure, sit and collect the dividend, and be there for when the oil price goes higher. Doesn't seem as though there's any catalyst for that to happen in the next 6 months. Yield is ~5%.