Canadian Natural Rsrcs (CNQ.TO)

(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.

They're pulling back along with today's slide in oil prices. Well-managed. It's geographically diverse, and has 20-30% gas operations and fewer operations in the oil sands than, say, Suncor. Diversity gives you protection. He used to own CNQ. If CNQ went back to $40, he'd look at this again.

A top 10 position for him. CNQ has been a big investor in the oil sands. They've made smart acquitions. Also, oil prices have been rising. CNQ will generate a ton of cash going foward, so the dividend will rise. One of the few Canadian oil companies trading at multi-year highs. This can be a core position. He does worry about the take-away issue (lack of pipelines) and the politics around it, but CNQ is is a great long-term stock. (Analysts' price target: $54.96)

Reporting earlier this month with YOY sales up 40%. Free cash flow grew 300% to $1.4 billion. RBC noted that on a $70 WTI, CNQ will generate $70 billion cash flow in 2019. They could buy back stock. Its cash flow will outpace the
sector's. Expect 25-45% upside with rising oil prices. (Analysts' price target $54.37)

Sold off today when Shell sold its shares. The deal was done at a 3% discount, but the whole energy patch sold off today ahead of Trump's Iran announcement. She would consider this stock. Trump pulled out of the Iran deal--but the EU didn't. Oil has had a good rally, but in Canada with the lack of pipelines (like the TransMountain deadline), she won't add much oil to her portfolio until this situation is clarified.

There has been a rally in the stock recently buy now increase in model value – currently at $45.88 (implying it is fair valued now). He would wait for a pull back.

Benefitting from rising oil prices. Sold in mid-2015 given oil concerns. Maybe he sold too early. Wonderful management. Will see a ton of free cash flow as oil prices rise. Dividend nearly 3%.

(A Top Pick January 23/17 Up 17%) This is the elephant in the industry. It is a high-quality company. The heavy oil differential has still hurt them despite the improvement in oil prices. Still a core position. He thinks the differential discount will get fixed, especially once Line 3 is completed on Enbridge.

Everybody loves this stock. They produce about 10% of Canada’s total production. This is one of the best performing names in the industry. Management will probably see $2 to $3 billion of free cash flow this year, which they can use to pay down debt and buy back shares or pay dividends. He sees this as a core holding in the large cap portion of a portfolio.