Canadian Natural Rsrcs (CNQ.TO)

They did a good job of making acquisitions. There is an overhang of 4 billion of stock to come out at some point. They can pay down debt, increase the dividend and buy back shares with it. (Analysts’ target: $48.00).

It is safe here. It does not rely on higher oil prices. Once their project is done they will have a lot more cash to throw around. The downside does not look too bad. (Analysts’ target: $48.11).

He is modelling a 69% 2017 estimated payout ratio at $53 WTI, which is probably approaching 80% right now. This company has outstanding growth. They just did an acquisition. He is modelling 20% production growth and 40% cash flow per share growth over the next couple of years. The acquisition is very accretive, but for it to work you need oil prices to cooperate. You need to have $50+ oil. He would be looking for oil companies with balance sheets closer to 1X EV to cash flow.

(Market Call Minute.) This is a hold.

They have struggled recently. They are digesting an acquisition. It is going to be a play on energy prices.

He is Short this, but it is more of a generic Short in that he needed a hedge being Long on energy. If he is wrong on energy, this company will be harmed quite a bit by a very enormous debt load.

Energy is his biggest weight in his portfolios and has been for a couple of weeks. We are at the lower end of the oil price range. CNQ-T has held up well over the last 5 years. He does not see the tail risk currently. You want to buy a quarter or a third into a position and do so on weakness.

As energy pulled off, he added to this in the last 48 hours. In a perfect world, he would have waited until it was in the low $30s. Likes the acquisition they’ve done. With the positive energy outlook, he thinks it will throw off fantastic amounts of money in a couple of year’s time. In this bad market, this is one he would add to. Dividend yield of 2.8%. (Analysts’ price target is $52.50.)

Has a BV of $25.17 at the end of Q4. They did the big Shell deal, and the stock dropped from around $44 to $39. Debt is now a $25 billion, and equity is about $30 billion, so the balance sheet is very leveraged. They are planning to sell some non-core assets. This deal is more well received than what the Cenovus was with Conoco Phillips. However, it is oil sands and a large part of their production is there. If oil prices go below $40, this stock will probably get hit, so you will have a chance to buy even cheaper. A great name to own for the next cycle, but is trading expensively.

It is hard to find value, but in the energy area amongst the seniors, if you have a 5-year time horizon, you are going to make good money. This is one that gives you that opportunity. Dividend yield of 2.8%. (Analysts’ price target is $52.50.)

Next year the horizon project will be completed and there will be no more capital cost. It started back in 1999. They have delivered exactly on plan. The balance sheet is in pretty decent shape. But the stock has run up a bit, so it is a hold.

He is pretty light on energy at this time. There is a lot of proof showing energy prices are going to remain low and steady. If he were going to have some weighting in energy, this is a great name to own. The technology for shales in the US will continue to put pressure on energy prices going forward. He would probably stick with some of the pipelines or some of the larger cap names such as this.

Had been Short this until they did their most recent acquisition. There are better names to have in energy exposure. If you are going to own this, you had better be right about oil prices. Good assets and a lot of debt.

Buying a lot more oil sand assets from Shell for $13 billion, and they know the stuff. They built up a lot of projects from the last cycle and cash flow is starting to come this year and next. Dividend yield of 2.4%. (Analysts’ price target is $53.)

It has become an interesting stock because they are making a very well timed purchase of shells oil sands assets to become the biggest oil company in Canada. It probably makes it attractive. But in the near term he sees oil going down so there is no reason to put new money into oil stocks.