Opinions
Alan Blake
Canadian Natural Rsrcs
CNQ-T
TOP PICK
Jun 14, 2007
Stock price when the opinion was issued
You might be interested:
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%.
About 70% oil, 30% natural gas. That gives you diversification. Trades ~12x PE. Good value, and will continue to grow. Buying back a lot of stock. Exporting energy to Europe will benefit any NA energy producer. Yield is 5.38%.
Unless there's a big recession that reduces demand, doesn't see oil getting too far below $60 (which is where it makes money). A lot of the US producers can't make $$ much below $60, so that provides a floor. So he's not too worried about the price of oil.
Best-run company in Calgary since about 1990. Slow and steady wins the race, they don't make mistakes. The name to own when energy does well. Right now the energy market's tough, but will get better slowly over time. Nice dividend, which increases every year. You could start accumulating. Solid play.
A core Canadian energy name, along with SU. Still, energy space has been very tough. Prices have been low, OPEC producing more than expected. Regulatory environment in Canada is challenged, as is the macro global economy. Great yield of 5.66% and should remain steady. Technicals don't look great. 200-day MA falling, and price is below.
He thinks crude oil will come back up. CNQ has an excellent management team and a diversity of production assets along with a huge portfolio of assets. Production is good and Capex is under control. It is at a compelling valuation and has the lowest cost and longest reserve of similar companies in Canada. It offers great downside protection. It can sustain its dividend and last year returned $7.1 billion to investors which should be repeated this year. It also got rid of $2 billion in debt. Buy 16 Hold 6 Sell 0
(Analysts’ price target is $52.38)In Q2-2025, the company generated an adjusted EPS of $0.71, compared to last year’s $0.88; the decline was largely due to weak commodity prices. However, CNQ managed to beat expectations of around $0.63. CNQ also returned around $1.6B to shareholders during the quarter ($1.2B in dividends and $0.4B in share repurchase). CNQ's business continues to remain robust and sustainable, and management believes the company can achieve breakeven in the low to mid-US$40 per barrel range, at which level CNQ could generate enough funds to cover maintenance capex and dividends. CNQ’s management is committed to continuing with its shareholder-friendly policy while maintaining a healthy balance sheet. Though there is some volatility in financial results due to the fluctuation of commodity prices, but we think CNQ continues to be a high-quality cash cow with attractive dividend growth prospects over time.
Unlock Premium - Try 5i Free
Premium contentThere is simply no better diversified company in the Canadian energy sector than CNQ. Quarterly cash reserves are growing again despite relatively lower energy prices, shares being bought back and debt retired -- good cash flow. It trades at 13x earnings, 2.1x book and supports a 20% ROE. Amazingly, the company has increased dividends for 25 consecutive years and the current yield is backed by a payout ratio under 60% of cash flow. We recommend setting a stop-loss at $32.00, looking to achieve $52.50 -- upside potential of 26%. Yield 5.7%
(Analysts’ price target is $52.17)In a flat or questionable oil price environment, this former darling is being sold as a relative trade. Take advantage of that. Best operator in the business. Just inked first natural gas contract off an LNG project in the US. Own it long term and do well. Yield is 5.7%.
(Analysts’ price target is $52.38)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%.