Opinions Josef Schachter
Cenovus EnergyCVE.TOCOMMENTMay 01, 2018
Josef SchachterStock price when the opinion was issued
As of Aug 14, 2026. Market Open.
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It is the cheapest large cap quality company in North America. They have been shooting the lights out with the highest quality assets in Canada. Also they have been able to exit non-performing refineries and at the same time increasing exposure to better ones while turning them around. Margins are up 200 to 300% year over year in the last quarter and he thinks this will persist. They are getting refinery exposure and best of breed highest quality oil sands assets. The time for the oil sands is now. They have one of the cheapest multiples of large cap stocks in North America. . Also they are paying down debt to very conservative levels and returning 75% of free cash flow to shareholders mostly in the form of share buybacks. He thinks that number will go to 100% next year.
In summary it has an excellent balance sheet and management team as well as decades and decades of inventory. He sees 50 to 60% upside.
Buy 18 Hold 1 Sell1
Eric Nuttall
All energy stocks have come off because we've had (cynically) a "peace scare" in the Middle East. Energy sector will continue to be robust.
Also likes, and owns, TOU.
Brendan CaldwellLightened up a bit after the runup. Price of oil will come down, but the bigger question is where will it level out? A hard one to gauge, but his sense is that it will take longer to get supplies out. (He's not a big believer in the pending agreement yet.)
In general oil isn't going back to where it was, and these stocks will be pretty good buys. One of the best oil-levered plays. MEG purchase was brilliant.
John Zechner
Set-it-and-forget-it way to get exposure to bullish oil thesis. New floor for oil is $80, and higher in years to come. Downstream exposure (refineries), with margins at record highs. Top decile oilsands assets. Another record quarter. Really likes management. Yield is 2.09%.
(Analysts’ price target is $43.47)Eric Nuttall
At maximum weight in his fund. Most obvious Canadian large-cap name to own right now. Security of supply is the most paramount issue right now. Thinks it's a $50 stock at $80 oil; his own in-house estimates model $79.
Benefits from best rock in Canada and massive expansions in US refining.
Eric Nuttall
Their Q1 production was 488,000 boe/day because of all their acquisitions but they reported losses from their hedge book. Their operating margin was $157 million cash versus $305 a year before, but they spent $522 million. The company has $9.8 billion of debt, up from 9.5 billion at the end of December. They have about a half billion dollars of assets for sale. They have $19.4 billion of equity. Book value (ex goodwill) is about $13.92, which is higher than the stock price. The dividend is about 5 cents per quarter. They have a new CEO. It is not clear where their growth will be. Schachter thinks they should focus on their thermal operations and get rid of their conventional-world assets. He is concerned about the balance sheet. The debt to equity ratio looks tolerable. He compared it to Whiting Petroleum, Chesapeake Energy and WPX Energy, all well-known American energy companies that are treated as very exciting but have much worse balance sheets. He sees the Canadian energy companies as value stories compared to the American ones. The bargains are in Canada.