Cenovus Energy (CVE.TO)

The war will eventually end and oil will resume flowing through the Strait of Hormuz. Meanwhile, the WTI-Brent oil spread will widen. Cenovus has very long-life assets in the Tar Sands, but also benefit huge from the refinery crack spreads.

Higher risk profile. Has come a long way in how assets are managed. An opportunity today if you believe energy prices will remain strong for a prolonged time. Be a bit careful. Dollar-cost average carefully.

CNQ tends to be his go-to producer in the Canadian energy patch.

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.

Over the long run, the MEG acquisition will work out OK if they can execute and merge the companies well. There's a bit of risk to that. Better company now than years ago.

He prefers CNQ as a better company and better run.

A name to consider in energy.

A great chart. From 2022-2024, this was a swing trade, within a consistent range. Then, it fell in early 2025, but then moved up, past resistance at $28 and kept going up. This can go higher as long as it wants.

EPS of 50c surpassed the 42c estimate, and revenue of $10.88B beat forecasts by 2%. Results demonstrated Cenovus' substantial expansion through its MEG Energy acquisition, with record upstream production of 917,900 barrels per day in Q4 providing crucial volume protection against softer crude prices. Despite a recent geopolitical boost to oil prices, WTI has averaged $61.40 in Q1, down roughly 14% from Q1 2025. With stable to growing production, operating cash flow will likely face pressure in Q1 and throughout the year without a sustained price rebound. Shareholder returns should remain a focus, but buybacks are expected to moderate from last year's approximately C$2 billion as Cenovus manages MEG-related debt and works toward its C$4 billion net debt target. They remain fully comfortable with the position, though commodity price direction will be critical. Unlock Premium - Try 5i Free

Makes sense to him. Deep Basin assets were picked up years ago, so this would be a chance to monetize those, pay down debt, and accelerate ROC to shareholders. Bay Street would probably view this very favourably. Shareholders want capital returned via share buybacks, and it's at a bit of a competitive disadvantage to companies like SU that return more capital to shareholders.

Believes reported headline number of $3B is light. Could be closer to $4B in asset sales.

Added in the high teens. Still undervalued, even at current share price. Fixed downstream challenges. One of the best operators in oil sands properties. Trades at 6.4x cashflow for 2026. He thinks 8x is appropriate, which is 32% upside at $60 oil, 60% upside at $70.

He owns other names, but you can't go wrong with this one. Good quality management. If he owned it, he'd hold. If you didn't own it, one of the go-to names for a Canadian portfolio.

On his farm team list of names he'd like to own. If RSI in energy were to turn higher, certainly a potential target for his portfolios. Trading above a rising 50-day MA, which seems to be in decent support here. Long term, probably a great buy. Acquisition of MEG was excellent.

In short run, he's not adding any energy until he sees some technical improvement.

Sensible deal with MEG. If you're buying a stock with a 3-month view, then you want to focus on your entry and exit points. Otherwise, he hesitates to talk about them.

Oil price environment is constructive. Reasonably good operator. Bit more integrated than, say, CNQ. Cashflow, dividends, growth. Buying now gives you a good setup for a 5- or 10-year view.

Energy has been doing well on a relative strength basis. There's a change in leadership, given weakness in tech, AI and industrials. Defensives--financials, healthcare and energy--are doing well, however. Energy is doing well despite the oil price going nowhere. The CVE chart is nice with higher highs and higher lows, but testing restistance now at $25.50.

From a momentum and charting perspective, looks better than peers. The one name in the space that's done well.

Cleaned up refining operations. MEG assets are a great fit. Great levered play on oil, but there are better such plays.

Done deal now, so MEG shareholders essentially own CVE. So the question becomes do you want to own CVE? He'd rather own a name with more natural gas exposure, as there's better growth there going forward. ARX comes to mind.