Canadian Oil Sands (COS.TO) Buy, Sell or Hold

Canadian Oil Sands (COS.TO)

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DON'T BUY

Limited capital appreciation. Yield is in question. Likely they have to cut (25%) the distribution when they convert to a corp. CPG has a slightly higher yield.

COMMENT

They are indicating .50 a quarter. They are going to convert at the end of the year. Their strategy will be to pay out according to what oil prices are doing. Distribution will be volatile. Thinks capital spending requirements will increase. Can maintain payout if crude prices go up, otherwise a risk in a cut.

COMMENT

Stock price dropped because of a couple of things. 1) Oil price is lower and 2) there is a perception, because of BP spill, there is political risk around anything that could possibly be environmentally unfriendly. 7.8% yield. His biggest concern is that it is a one trick pony.

DON'T BUY

Was downgraded by BMO today and there is a lack of enthusiasm for this one. Solid enterprise but it doesn't seem to generate the excitement that others are doing.

WEAK BUY

He is underweight energy. Likes the way oil is behaving. This one has been under performing. If you believe oil will be strong and will move higher, it is one you can own. Prefers mid-size companies that are using newer technologies such as Crescent Point (CPG-T) but doesn't think you will get hurt too badly with this one.

SELL

Likes oil sands but this is not one of his favourites. If you own, consider selling and buying something else on a market pullback. (See Top Picks.)

DON'T BUY

Pays about 7%+ yield but expects this will start coming down by 2011. Based on Price to Cash Flow it is not cheap. Prefers Suncor (SU-T), which trades at a discount to its NAV and is a growing company.

COMMENT

Has been some gentle fear in the air that while strongly held, is a bit vulnerable to endless cash flow. If it has losses, then it can continue not to pay tax. As a result of strategies to avoid tax, distributions may exceed cash flow. They are a major in the oil sands.

PAST TOP PICK

(A Top Pick July 16/09. Up 9.88%.)

BUY

Largest owner of Syncrude. No exploration risks. Constantly making it bigger so there is good growth there. Decent payout, which he thinks, will increase over time. (See Top Picks.)

DON'T BUY

You are buying the oil sands, which gives you growth, but this is not a growth company. You are really buying it for the dividend. Prefers Crescent Point (CPG-T) because he gets more of the dividend with a growth company.

PAST TOP PICK

(A Top Pick July 23/09. Up 10.44%.) Great company to own.

WEAK BUY

Yield is safe. Oil prefers will trade within a range. Operations performing reasonable well. If some of negatives of oil sands have been offset by Gulf problems, then this will do well.

HOLD

Trade out to get better capital gains elsewhere, but it yields well. They have been doing some financing through follow-throughs, which makes them think you are not going to see any increase in dividend. But you are probably safe. Hold it for income. Capital gain is 4-6 months.

WEAK BUY

(Market Call Minute) Just raised distribution. It’s a good business. Not a lot of upside and volatile.

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Canadian Oil Sands (COS.TO)