Canadian Natural Rsrcs (CNQ.TO)

Management always good at executing. Balance sheet allows them to make favourable acquisitions. He owns this instead of SU, because you only need to own one of the big oil companies in Canada.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Looks fine. Compared to peers in the sector, it has not cut its dividends in downturn. Raised dividends in March. It is good for sector exposure and is looking very cheap at 10x earnings. Unlock Premium - Try 5i Free

He prefers Suncor, rumoured to be held back by massive selling by the Saudis. He expects SU to outperform CNQ. CNQ outperformed last year. Its valuation is better than SU, but he expects SU to outperform.

The whole reflation trade is a trade. Oil stocks have been beaten down for a while. For a trade, the energy price pop is good. However, as a long term trend, they are not investable since there is a move away from traditional energy. He has no preference between CNQ or SU. He is overweight energy right now.

He would prefer SU for the dividend but there is risk that it will be cut. CNQ is a little more natural gas as well.

CNQ would be better for dividend sustainability. They have less maintenance requirements on their properties, a better run company. There is better inside ownership. He owns both. At $60 oil, CNQ will have 18% free cashflow yield. Suncor has less leverage due to refining exposure.

The Painted Pony transaction is immaterial in the grand scheme of things for CNQ. CNQ is a well-run company. It could probably double from here with their cashflow break even being at $27 for maintenance cap-ex. A very well-run and cheap large cap. He just prefers small cap.

It does not have downstream operations, but is trading at the same valuation as SU-T. He would give it a pass. There was a sell signal three weeks ago. Wait for a positive transit.