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

PAST TOP PICK

(A Top Pick Oct 18/19, Down 64%) He recommended this long before Covid. Still owns it. The oil industry has been decimated and hard to get excited over.

HOLD

It is undoubtably inexpensive at 3x cashflow. However, he no longer owns this because there are other opportunities, but there is nothing wrong with this name.

PAST TOP PICK

(A Top Pick Oct 18/19, Down 56%) Worries about the balance sheet. Most of these companies don't make money unless oil is over $50.

PAST TOP PICK

(A Top Pick Aug 30/19, Down 43%) The oil fundamentals are stronger now than the start of the year. Looking at the multiple compression that happened in the sector, he expects the value of the stock to double once the macro environment normalizes.

RISKY

It is certainly a high risk/reward play. One thing it has going for it is a very favourable hedge going for it. The question is only going into next year, what will prices look like. They have net debt over $2 Billion. The dividend has been reduced to a level where it is hopefully sustainable. He would prefer others. However, if you want to take some risk in your portfolio, you could be well rewarded.

BUY ON WEAKNESS

Debt has come down after selling many assets in past years from $2.7 billion down to $2.5 billion. Expect production to decline further in coming quarters. CPG will spend money in Q4 which will raise production numbers. It's bounced up very well from its bottom earlier this spring. He's buying on weakness. He likes CPG and its assets. The key is the recovery in oil prices in Q4, which he predicts.

HOLD

They are probably positioned better than most producers right now. It has had a lot of challenges prior to COVID-19. They have been restructuring for some time. They sold off non-core assets. If he were to buy a producer, this would be on his short list.

PAST TOP PICK

(A Top Pick Aug 30/19, Down 44%) They monetized assets last year and started this year with a good balance sheet. At $50 oil prices it trades at 2.8 times cash flow -- historically it traded as high as 8 times. He thinks oil will get back to these levels by end-2020. It remains a large holding in his fund.

COMMENT

SU vs CPG? During the recovery of energy prices, SU has seen its balance sheet improve dramatically. CPG has worked hard and have improved their debt levels. At current oil price levels, both look okay. If he was putting money into energy, he would prefer going with the heavy weight -- SU.

PAST TOP PICK

(A Top Pick Jul 19/19, Down 56%) They did an awesome job monetizing some assets, including their Uinta holdings while getting good pricing. They will generate free cash flow as oil prices recover. They have good hedge positions. When interest levels returns to the space it should see a big rebound in value.

COMMENT

Energy is facing its toughest times. If you are bottom feeding, he might still avoid this sector. The companies that will get through the best will be the ones with their costs under control. CPG is a lower cost producer, but he would prefer someone like EOG -- the lowest cost shale producer. He thinks CPG may require more equity or debt to grow going forward.

DON'T BUY

CPG-T vs. MEG-T. Oil is the most important part of the Canadian economy. He would not touch either of these stocks. Both have leverage and are in financial distress. Oil is almost trading for free. Storage is getting full. It is very costly to shut down an oil sands well, and to almost the same extent to shut down a conventional well. Companies pump the crude even if they almost give it away. Neither of these companies have downstream refineries.

PAST TOP PICK

(A Top Pick Apr 26/19, Down 75%) It remains a core holding for him. They have a great balance sheets as they monetized some assets and hedged aggressively last year. They have about 18% of their oil hedged at $54 and 38% receives a $10 premium to WTI. They have only drawn $500 of the credit line, leaving $2 billion of capacity yet. He expects a $100 million cash burn at $25 oil.

TOP PICK

In 2013/14 he was ridiculed as he said it was a sell, and now he is making it a buy. He would put a bit of money on 10 of these companies. The three that are left after this is all over will be 10 baggers. It's a lottery ticket. (Analysts’ price target is $2.44)

DON'T BUY

In January, it broke its rising trend channel, way before Black Monday today. There was no reason to own this coming into this period. It's well below its 200-day moving average. The only positive is that today it was massively oversold.

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Crescent Point Energy Corp (CPG.TO)