Crescent Point Energy Corp (CPG.TO) Buy, Sell…

Crescent Point Energy Corp (CPG.TO)

11.72

-0.04 (0.34%)

as of May 14, 2024, 8:00:00 pm Market Open.

1026 watching

DON'T BUY

Oil prices? He doesn't have an oil price forecast. CPG is like a lot of other companies -- divesting assets and paying down debt. He thinks Canadian equities are dead in the water here and does not know what catalyst will help change things.

WAIT

Average down? The mid-cap energy trade has been very tough. CPG is executing on their plan, paying down debt, changing management and selling assets. If you like oil, thinking it will go up in value, it would be a good buy. We need to see large foreign investors coming back in again. You might buy CNQ instead.

TOP PICK

They are buying back stocks and breaking the trend of issuing more equity and growing. They have decent light oil, strong production and good cash flow generation. The energy sector risk is there, but it is a good buy among them.

COMMENT

They're paying down debt and buying back shares. He still doesn't like this stock or Canadian oil stocks. Wait longer. They report in November. He hopes the balance sheet looks better.

HOLD

$10 in a year? They have under gone a management change and he likes the new team. They have sold assets, reduced operational costs, and maximizing cash flow to buy back stock. He would like to see them be more aggressive on the buyback next year. The stock trades at 3 times cash flow and at 74% of their liquidation value -- incredibly cheap. They plan to monetize some of their infrastructure and are buying back $100 million in shares by year end. He would like to see them buy back 10-15% of their shares next year to improve all metrics, while not foolishly production. Back to $10 would require a multiple of 5 times cash flow -- he is optimistic.

PAST TOP PICK

(A Top Pick Nov 19/18, Up 3%) They had a massive asset sale. They are still planning to try to monetize some infrastructure assets.

DON'T BUY

He thinks CPG-T should merge with a small company and re-brand itself. It looks like others in the space that have lost their credibility. They are selling assets, shrinking production, to improve the balance sheet. At best $8-$9 is the upside potential for the share price. He would prefer others in the space.

DON'T BUY

They sold some assets in Utah and southeast Saskatchewan. He has a $7 target. He is not enamoured with it because they talked about selling Balkan assets, then they said they would sell mid-stream assets and then changed again when they actually sold assets. Are they selling because they have to sell or because they are focusing on their best assets?

BUY

He does not know that tax loss selling could start now. He thinks people will get out of one energy and then get into another. CPG-T had quite a rally this month. It has run into resistance. It is above the 200 day average.

DON'T BUY

Has gone through a lot. Cut dividend to almost zero. Criticized for past acquisitions. Now need to sell off assets and refocus, and they've done that. Chart reflects what's gone on in energy patch. She doesn't have any energy exposure now.

DON'T BUY

There is a play on energy names going into the election as there may be money coming into the sector depending on who wins. He would trade it but not invest in it. It should be an underweight.

DON'T BUY

Has the culture been fixed? Have they decided what to do with the dividend? He feels they have now found religion with regards to their acquisitions. The only thing that can fix them is a slow down in US oil supply -- that could take some time. Given their past on acquisitions, he would pass.

TOP PICK

It still has an ancient stigma, but that's old history. It trades at a 20% free cash flow yield, and trading at 70% of its liquidation value. Land interests total $1.1 billion. or 50% of its market cap. They're marketing some infrastructure assets. If they take one-third of that to pay down debt they can buyback 20% of all shares. A deep discount name that can unlock a lot of value with a catalyst. (Analysts’ price target is $6.91)

SELL ON STRENGTH

It has a debt problem. They are planning to sell assets. Now they are talking about mid-stream assets in Canada. They cut the dividend and are now talking about stock buybacks. He owns a small amount but is not enamored with it. He would sell at $7. (Analysts’ price target is $6.91)

BUY

He sold Suncor to buy this recently. It is hitting bottom. He bought it around $3.80, because it can jump to $5 quickly on positive news.

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Crescent Point Energy Corp (CPG.TO)