Cenovus Energy (CVE.TO)

(A Top Pick Dec 10/12. Down 8%.) Missed a couple of quarters. Part of it was that they had positioned themselves that they couldn’t do any wrong having the best reservoirs, best steam oil raid shows (?), great management. Thinks they now have their act together and he is looking for some very strong quarters. 3.25% yield.

Had liked this because he felt this was a company that had great assets and were really concentrating on cost structure, etc. Lately he has found that from a cost perspective, they weren’t as conscientious. Missed some numbers over the last little while. Sold his holdings and moved into Suncor (SU-T), which is a better play here.

(Market Call Minute) Stay away until they get Foster Creek issues resolved. US short community is active in the stock.

Does this benefit if the spread between the WCI and Canadian narrow or expand? Yes it does. About a month ago he was very bearish on oil but he likes the current level a lot better. This used to be the jewel with every earnings report being gangbusters, cash flow had increased and production had increased. Last report was not that good and he thinks the shine was off the armour. However, it is still one of Canada’s premier oil companies. Not the one he would be buying but has no problem with the stock at this point. Prefers oil that is not from the oil sands.

If you are comfortable with his outlook that growth is likely to continue relatively strong, then economically sensitive economies like Canada should do well and materials stocks should do well which means energy and materials stocks should do well. This one hasn’t been a great performer over the last year and is still well below where it was 2-3 years ago, despite the fact that it is executing quite well.

Very well-positioned in the oil sands. Very predictable growth going forward. A lot of their projects are just ramping up now. He expects there is going to be more and more commercial production. Demand for bitumen should be picking up over the next few years. 3% dividend yield.

A great Canadian energy company. Return on equity has not been good in Western Canada but these guys have a 14% ROE. Production is going up and have raised their dividend 10% a year for the last two years. 3.14% yield. Well positioned and disciplined management team. You are buying it relatively cheap here.

$29.90 model price, negative 3.5% differential. Certainly there is better value elsewhere.

(Top Pick Mar 11 /13, Down 4.88%) Still a favourite of his. Everything he saw happening this year has happened but stocks have not reacted because US investors have abandoned Canadian energy stocks. At the top of his oil stocks to hold.

Energy stocks in Canada will go sideways for a couple of years. With new money be a buyer on a dip. Suggests XEG to play energy. He wants to be a seller of energy stocks in general.

A good place to be before the run. SagD operations. He trimmed oil recently and would not have a problem trimming this one.

Nothing wrong with the company but if you want the Canadian energy sector you want to be diversified. You might want to look at ZEO-T, an ETF with equal weighting. It should get a better long term result. He is a big fan of it and it pays a dividend of 3%+. But there is nothing wrong with CVE-T. The sector will be range bound and you should take money off the table when it is weak and then wait to put it back in.

Benefited from the strength and refining margins in Nat Gas. Faltering the last few quarters and things they are turned around right now. Would hold on to it.

His energy exposure is specifically in regions where there is very rapid reserve growth and he doesn’t feel this company is there. The other area would be the high-yielding energy companies, with very low decline rates and this company is not in this camp either. (See Top Picks.)

Has lagged other seniors a little bit this year because of some operational problems but the long-term outlook is very good. 8%-10% production growth per year. Chances of a dividend increase later in 2014 are fairly likely. Expect the stock will be in the mid-$30 in the next 1 to 2 quarters. 3.1% dividend yield.