Encana Corp (ECA.TO)

Pure play on Natural Gas. An absolute outright bargain for a 5-year play. If you like Nat Gas long term it is a good buy. Likes natural gas. It makes the most sense. A great stock to trade. Weakness is welcomed in terms of new money. Could be a 10% pullback on this in the short term.

(Market Call Minute.) The new CEO is going to take at least 3 months to figure out what he wants to do with the company. There are serious internal climate issues. Fully valued relative to other natural gas companies.

New CEO is going to have to step back and reassess their long-term strategy. Was probably over optimistic on natural gas prices. Have to keep their costs low and not overpromise on their production targets. Her view is that natural gas prices have troughed and are probably going to be in an upward trend to the $3-$4 level. She prefers some of the smaller intermediate producers that have a higher yield.

Despite the great glut of natural gas, gas price has doubled from $2 to over $4 and looks like it is going to ooze higher. Stock had a nice recovery because of this, but he thinks it needs more. It is massively exposed to the huge development in BC. If the BC government can get everything together, it looks quite interesting. However, earnings are slipping. Good stock for the longer-term.

Accumulating shares using DRIP which cannot be withdrawn for 5 years. Comment please. A great strategy if, the stock price doubles. This would be the biggest question you have to ask yourself. DRIP plans are an inexpensive way to accumulate shares and to reinvest and automatically compound those dividends. He is totally in favour with this type of strategy. The one thing you have to worry with DRIPs is of your holdings getting unbalanced. Natural gas companies are still not at a stage where they are experiencing great profitability. He is holding some but does not have a full position yet on this stock.

(Market call minute.) Probably worth buying at these levels. Trading at a discount to NAV. Reasonable yield. New CEO coming in will make a difference.

If natural gas proceeds on an upward course close to $5, (which he doesn’t think it will) it will build a base of $4-$4.50. This could be helpful to them. What he thinks will be the big driver for all the natural gas companies is the drive to export LNG.

This is a “go to” stock for portfolio managers that are running large portfolios. Stock had a low in early January 2012 with a slightly higher low this year. He is bullish on natural gas. The recent announcement by the Obama administration to allow exportation of the LNG terminal is good.

Rates it as a neutral. Has not added to Nat Gas, but we are starting to see a lot of movement in the Nat Gas area. He has two private companies in the space so has not bought ECA but otherwise would own it. Also, likes Pengrowth.

Used to own it, sold about 4 years ago. It looks to be in a good place now. A downtrodden stock that has real value. Particularly when things are moving towards natural gas. The whole fracking thing took the sector by surprise.

Needs $6 per MCF to get a good economic return. Prefers TOU-T. ECA’s hedging contracts are running out. Higher cost producer.

(Market Call Minute.)

We have seen some recovery in natural gas prices recently. 3^rd largest natural gas producer in North America and selling at a fairly compelling valuation. Dividend yield of 4.37%. Sells at a discount to peers, but holds key emerging plays.

Would you buy this for a long-term hold, such as 5 or 10 years? He would for a long-term hold. Outlook for the natural gas industry has been improving of late. His top choices in this area would be Peyto Energy (PEY-T) and Arc Resources (ARX-T).

One of the few he owns right now. It is significantly depressed. We are going to use a lot more gas going forward. You must have a 3-5 year horizon.