Crescent Point Energy Corp (CPG.TO)

Though she has this in some portfolios, she has not been actively buying for a couple of years. The stock price will be dictated by where crude prices go. If the OPEC production cuts have more effect, and we start to see inventory drawdowns, then energy names can start working. This company has been known to issue a lot of equity to fund positions to grow their inventory land. The last issue they did was not very well received. They have a very attractive land base to drill from, so she doesn’t expect they will be looking to acquire more.

Sell Baytex (BTE-T) and Crescent Point (CPG-T) and move into Teck Resources (TECK.B-T)? Crescent Point and Baytex had high dividends. When oil fell, the dividend strategy collapsed. From this, he learned don’t rely on commodity stocks to pay dividends. Both are down in the dumps, but both are good names. Baytex probably has a little more debt than he would like, but this one is really trying to remake itself. If looking for torque in a portfolio, you will probably get more in the near term, from a base metal stock that you would from an oil stock.

After that enormous run we had he thinks oil will settle down to where it is supposed to be. CPG-T will have to adjust to current price levels and get costs down so you can get more valuation.

This has been basing for a good year and a half. Looks like there is some support in the low double digits, close to $13, maybe $12. If it could bounce off that, it could be okay. It is not showing any signs of wanting to break out of its pattern. The chart also shows a series of lower highs and lower lows, and the hope for it is that the support of $10 will kick in real soon. If he owned it, he would be really worried that the $12 support might crack. If it does, Sell.

He stopped owning it and liking it because they were a serial issuer of stock for acquisitions. Also, he prefers Nat Gas stocks.

Chart shows it has been going down since mid 2016, even in the times when oil has rallied. This is a show me stock at this point. Investors don’t believe them anymore. Also, he is not bullish on oil at this time.

Thinks many people are discouraged by its lack of activities. They keep on making acquisitions of companies with prospective areas, or land plays, and issue shares to cover that. Right now, they have a reserve life of 15 years, and about 12 wells to be drilled. They have 3 recovery methods. 1.) Drilling. 2.) Water floods which takes a recovery rate from 15% up to 25%. It has an unbelievable upside in production rates. He can see this going up through the years to 200,000-300,000 barrels a day, but the question is, will the stock do anything.

Hitting a 52-week low. Payout ratio is under 100%. Growth rate is not bad. A name he has liked because production has increased every year since 2014. It isn’t the best in the oil patch in terms of efficiency, but it should be trading at a lot more than what it is currently. Thinks the fall has probably been overdone. Yield of 2.7%.

He owns no commodity oil producers. Oil has done well twice during his investment career. It did well when Japan industrialized in the 60s and 70s. Peaked in 1979 at $40 a barrel, and bottomed 18 years later at $8. China came along in 2002 and it started to perk up again. Meanwhile, the Western world is working hard to become more energy efficient and switching to natural gas, which has become abundant. Companies like this do very well when there is peak pricing. It is a high risk/high cost provider, but they do best when prices go up because there is lots of leverage.

Feels this is fully valued. It is implementing big water floods to try and tweak the reservoir and keep the decline rate more manageable. A really well-managed company, but he doesn’t really see any strong growth or any particular reason you need to have this.

Chart shows the 50-day moving average coming right along the top of the prices. Each time it got up to the 50-day moving average, it brought in some sellers. He took a half position in energy, even though the strong seasonality started about 1.5 months ago. You could see this come as low as $14, and then bring in some buyers. It has a positive MACD, so it’s getting momentum and money starting to flow into it, but that doesn’t mean you still can’t get some volatility. Anywhere between $14.70 and $14.40 is probably a reasonable less risky entry point.

This was the darling of the street in 2014. With the erosion in the price and the balance sheet issues, they had to cut back on the dividend. They now have $2.7 billion of debt against $9.6 billion of equity. The BV is $17.61. It isn’t often that you have companies trading below BV. Thinks the stock will go down another $1-$2 because of concern about the balance sheet and not much growth.

It has tested $10 a couple of times. The trouble is that it is in a down trend channel. It could get close to that $10 again.

(Top Pick Feb 10/16, Up 11%) It had a great start. Unfortunately they chose to raise some equity and the stock went down. She still likes it a lot. It is a core name. She sees very good wealth creation ability. They have good netbacks. They have a good balance sheet. They are now seeing results from water flood in 6 months, down from a year. This is a game changer. She still sees a lot of upside in it.

They have done everything right. The balance sheet is pretty good. They are really cheap relative to peers. They still have good production growth. But the cash flow in 2018 is projected to be lower than in 2015. It depends on your view of oil prices. They continue to decrease costs every year, so a year or two out they may be fine. It will be very attractive if oil prices go higher.