Canadian Natural Rsrcs (CNQ.TO)

(A Top Pick Aug 26/13. Up 51.67%.) Spent a good part of 2013 in the penalty box. A very, very well-managed company. Diversified across natural gas, heavy oil and light oil. Growing dividend and growing production. This is still a Buy at current levels.

(Market Call Minute) It is on her watch list.

It is pretty viable right down to the $50 range for oil. It is a legacy producer. It is pretty sustainable at that rate. It is a bench mark name that people follow widely. It is a proxy for oil to many people. He would not sell at this point. Doesn’t see much down side at this point.

Sold his holdings recently. Had a great run from the low $30’s. Heavy oil spreads have tightened, which has benefited them. Valuations in the sector have gone higher. He would look to buy this back again in the low $40’s. Still a good, long term growth story.

The energy sector, particularly the energy exploration and production industry, tends to have 2 periods of seasonal strength. The first one is from January all the way through to May. The next period is just approaching, basically the last half of summer all the way through to Labour Day. The average gain for August and mid-September is about 5%. Trends are still very much positive. 1.9% dividend yield.

One of his favourite stocks. He is kicking himself for not having bought in. In the next 12-18 months with a pipeline expansion, you are talking about a million more barrels of throughput.

Among the seniors of the oil/gas producers and have a huge following. Has always been extremely well-managed. Lately this has had a very, very good run. Wouldn’t be jumping in at these levels.

Some stocks have run too far while others have already had a correction. This one could go back to $43 and then it would be a buy.

Spinning off tons of cash. One of the largest senior producers in Western Canada, and produce about a million barrels of oil a day. Phase 2 expansion in Horizon as well as its thermal projects, gives it a really good line of sight for amping up its production with another 250 million barrels by 2017. This will mean an extra $2 billion per year of free cash flow available, which could be used for increasing dividends or further asset purchases. Also, have a nice handful of royalty assets that could be spun out. Yield of 1.89%.

Chart shows the trend has been upwards. This has a lot of positive technical things that you want to see in a Canadian energy stock. The 1^st period of strength is late January right through until May. It then takes a break, and around the 3^rd or 4^th week of July it has another move on the upside. Look for this one to stabilize around current levels, but look for another opportunity to add as you get into late July.

Such a great operator, great growth profile. Analysts are still forecasting a $90 barrel of oil and $4 MCF for gas. CNQ-T has some more room to go. Prefers SU-T because of assets, but CNQ-T is also good. There are probably more legs even if oil comes off a little.

We have had a huge run in the energy sector. Has been saying for a couple of months that it has been overbought, but has been wrong. However, looking forward 5-8 years, oil prices are trading in the low $80’s, not $100+. So the outlook down the road is for huge supply in North America. Looking at a longer-term chart on this company, we have to recognize that we are up against some pretty major highs from past rally cycles, so he doesn’t see much upside here. We should get a pullback, in the lower $40’s, before getting interested. This applies to all large-cap Canadian names that focus on the oil sands.

His “Reduce” support line is $47 and his “Sell” line is $44.90. Chart shows a nice upward trend. All the moving averages are running up parallel. There was a little bit of consolidation around the beginning of May, and broke out to the upside in the beginning of June. He can see this continuing to go up.

On their investor day, it was driven home that the company is now in a position where they are going to be generating a tremendous amount of free cash flow, because the assets that they have are very long life, low decline, and have a wide variety of assets. Also, has been a very sharp increase in dividend payments they have been making. Yield of 1.88%. Large royalty portfolio could be valued at PrairieSky levels.

He likes this. Oil companies like this have had some pretty good quarters. It now has a habit of kicking money back to investors with share buybacks and dividends. Also, has some great property. Good management. Good balance sheet. The one thing that could be coming up with this is the royalty trust. (See Top Picks.)