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

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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

BUY

It has been ignored by the street. It is an 8.4% secure dividend yield. Equity is $16 a share.

DON'T BUY

Why is it so low? Canadian energy suffers from very negative sentiment, though the WCS spread has narrowed (which is good). CPG management is finally getting the point that investors don't want them to keep issuing equity. So, CPG is trying to do asset sales, but so are peers. Also, we're in tax-loss selling season. She owns very few energy producers.

COMMENT

Dividend safe? The black cloud over the industry affects this company, everybody loves to hate it. Last quarter was OK. This quarter we'll see if they've hedged some of their sales. Doesn't believe oil will stay this low for long, we'll be back to $50-60, even $70. Dividend is OK, though he can't guarantee it, but the cash flow supports the dividend. Yield is above 9%.

DON'T BUY

Vermilion (VET-T) vs Crescent Point (CPG-T) Neither of the two. Not overly optimistic on energy. He is underweight energy and sees little opportunities. Doesn't see supply cutting down anytime soon and we need that to happen for oil prices to rise. Prefers Suncor (SU-T) which is more conservative and integrated and has a decent dividend.

COMMENT

He had shorted it, but it's fallen too far, too fast. CPG's challenge is an asset base that isn't producing cash flow relative to debt (also facing many overlevered energy companies). Terrible price momentum and very volatile. He's neutral on this. He needs to cash flow return and momentum to stabilize to get interested.

TOP PICK

Dividend over 7%. They are going to sell about 50,000 barrels a day to knock debt off by $1 billion. It will strengthen the balance sheet. Book value is $16.70. (Analysts’ price target is $11.60)

DON'T BUY

Baytex is his largest holding. He does not own CPG and would not own this. CPG is undervalued and cheap but so is the entire sector. CPG has several challenges and he would stay away from it. Their asset base is older and more tired. So more cash flow has to go to sustain production and not allow them to grow production.

BUY

A love/hate stock for a long time. Before investors loved this, then it fell on rough times. The valuation is good now, but it'll be more volatile than its peers. You're okay buying it at these levels.

HOLD

She owns it but would consider it a hold and not an immediate buy. They are trying to sell some assets but may have some difficulty doing so. She expects some uncertainty in the coming quarters. She believes dividend should be fine. If they can’t sell their assets, may see a dividend cut, this is why it is a hold. Yield = 7%

DON'T BUY

The issue with CPG is that Canada is a high-cost oil producer, but CPG is producer of marginal oils, which is even worse. Also, they have lots of leverage. The low price of oil is killing them. If the price of oil shot up to $100, CPG would be the stock to own because it'll rocket, but he doesn't see this happening. He wouldn't own this or any energy stocks.

SELL

Stay away – he has been saying this for five years. He sees substantial asset write-downs coming. The balance sheet is not rock solid. They will continue to lose money this year and doubts their estimates for next year. A total disaster.

HOLD

CPG-T vs. SVE-T. He does not think the energy sector is coming back in a big way any time soon. There are over sold indicators so it is okay as a trade but not for long term. We need pipeline capacity. He is fine with CPG-T.

DON'T BUY

He's been long underweight energy. Management has issued more stock and cut the dividend in recent years and broke promises. CPG managers used to be conservative, no longer. He prefers other names like Suncor which is resilient when oil prices slip.

DON'T BUY

He met with the new management and is convinced it is not enough to change investor perception. The level of distaste for the name is at all times high. Exposure in Utah is also hurting as investors see them alone and it is risky and boring.

BUY ON WEAKNESS

They had a recent management change. They sold an asset and so production is down a little. The company is in the process of selling another 50000 boe per day to reduce debt by about $1 billion. The yield at $8 is an attractive 4.4% and the company considers it secure. The company is attractive at this price, but tax loss selling season will be nasty for this stock. He thinks the stock could drop below $7.50. He will recommend it as a buy at $7.50. The 52-week low was $6.66. He is not sure it will drop that far. This company has very good assets and is a name investors should want to own for the long term. Yield 4.4%.

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Crescent Point Energy Corp (CPG.TO)