Canadian Natural Rsrcs (CNQ.TO)

(A Top Pick August 21/2017, Up 16%). Pipelines are weighing on sentiment. Just finished a big cycle of cap spending, so this frees up cash flow to pay higher dividends. Higher dividends, not growth, is the future of the oil patch. Smart in buying up distressed assets. Will be around for a long time, no matter what happens to pipelines.

Along with Suncor, these are the two big boys on the block for the energy sector in Canada. CNQ-T has done some great acquisitions and have managed their balance sheet smartly. Once capital flows back into the sector, this will be an excellent holding.

It has been selling off more aggressively than integrated companies, because of their lack of refinery exposure. Their production growth and cash flow yield looks very good. They have been buying back stock. He sees better opportunities to take advantage of rising oil prices, but would continue to hold it.

Canadian Natural Resources (CNQ-T) vs Suncor (SU-T). Both are trophy stories of Canada. CNQ is in 2 businesses and Suncor is in 3 businesses. CNQ is in the oilsands. Suncor is in the oilsands plus the production side, and the refining business. Both are generating free cash flow. CNQ is looking at expansion in their Horizon project. Suncor has been increasing dividends and buying back stock. On weakness on either, both would be great to own.

VET-T vs. SU-T vs. CNQ–T. CNQ-T is the cheapest of the three in terms of price to book. It has a nice upside potential of 40% on current earnings, which have been rising at a nice clip. Buy the cheapest of the three.

The best large-cap energy company in Canada. However, Iran, Iraq, Russia, Libya and other big oil producers are being constrained to sell oil. Canada, too. We need better politics to make our energy sector more attractive to investors. He fears a revolution in Venezuela in five years where they want to bring Exxon. Other countries, like Iraq, need oil revenues, too. That said, the world is reducing fossil fuel consumption. This is a tough business

It's a little above resistance now. It's entering seasonality starting late-July. Chart looks good.

The energy sector has been improving over the past few months. Suncor and CNQ took advantage of the downturn with some smart acquisitions. CNQ is trading at the top of the sector and is a large holding in their portfolio.

(Past Top Pick, June 7, 2017, Up 28%) Well-managed and -financed company. Good balance sheet and cash flow. He tends to do well and he has long believed in it. Good price today.

He still likes it here. It rebounded from its lows. A lot of energy companies have very high decline rates. This one has a low decline rate. This company is truly a free cash flow machine. He likes how they are de-levering. He feels more comfortable with this one vs. SU-T. He prefers the cash flow profile given capital expenditures over the next few years.

Even if oil stays at 70 dollars this company is printing money because they have the big project built in the last years. He likes the execution and Management. Yield at 2.8% is not too bad. The pipeline issue is improving. (Analysts’ price target is $56.50)

Crescent Point or CNQ or Parex? Portfolio strategy, especially in a taxable account, if you own Crescent Point, could consider taking a capital loss and going over to CNQ. The oil stocks have really lagged the commodity. Significantly undervalued. If you have big oils in your portfolio, they could underperform Crescent Point. Once Crescent Point starts to move, it will probably move fairly dramatically.

This is their year. Has rebounded with oil prices, still room to go. Executing well, wall of cash flow coming, good yield.

He has been involved from early stages. The key is the operation people that have done extraordinarily well as well as the timing of acquisitions. It does acquisitions on a contrarian basis. They built the business very effectively over the years and rates right there with SU-T in any portfolio.

He does not own any oil companies. He is concerned about environmental groups and indigenous peoples who can slow down major energy projects. He believes that more pipelines will be built, but he is doubtful that they will be built in a time frame that is helpful to today's investor. He thinks it could be 3 to 4 years before the pipeline hits the coast.