Encana Corp (ECA.TO) Buy, Sell or Hold

Encana Corp (ECA.TO)

4.96

-0.23 (4.43%)

as of Jan 24, 2020, 9:00:00 pm Market Open.

267 watching

DON'T BUY

Almost a pure play on natural gas. Prices are extremely depressed so this is one he wouldn’t keep in the short run. In the long run, the big energy companies are out buying gas companies but their time horizons are decades as opposed to years.

DON'T BUY

Good for the long term? This is not a good time to get in. Sees natural gas prices staying below $4 for 3-5 years. Did a great job of hedging, higher than current prices. Sees them changing their strategy to focus on oil. Would recommend Suncor (SU-T) or Canadian Natural Resources (CNQ-T) instead.

COMMENT

Natural gas liquids is a good place to be. As natural gas has been out of favour, this would be a contrarian play. Has been pretty beat up. Could be an attractive opportunity over the next year or so. One of the blue-chip players in natural gas.

DON'T BUY

Post the split, focused on gas but not the best timing. Natural gas has increased supplies, particularly with the shale plays. In the process of divesting a number of assets, trying to rebalance the balance sheet, which got too skewed to debt. Hard to see gas being an economic driver for the next little while.

HOLD

Nat Gas and share price suffered with softness in Nat Gas prices. Dividend is safe because they have a good hedging program to protect their dividend. They are more conservative on the forecast for Nat Gas over the next few years. Thinks this is the floor for gas. Have a large inventory of properties and could sell off some properties. Descent long-term hold. Could be dead money for a while.

DON'T BUY

Not his favourite name in the energy space. He thought the decision to split up the company a while back was a bad one and it turns out he was correct. Supply/demand dynamics are not favourable. Prefers Vermillion and Freehold.

DON'T BUY

Doesn't like betting on weather and if it will be colder increasing demand for natural gas. Natural gas market is not growing. Dead money right now.

DON'T BUY

Nat Gas is a tough business right now. In energy he has gone from overweight to underweight (8%). He wants a yield in energy stocks. This one is only 3%. The stock is not responding. The big producers are performing badly. He would prefer to stay away unless it has a bigger yield. Prefers mid-stream assets in energy.

HOLD

To go up we need a driver of Nat Gas prices and is not necessarily in the cards. The stock is fairly cheap. It’s a good place to go long term. There is not a lot of upside in gas needed to get the stock moving. Don’t add to position now. Just sit on it.

DON'T BUY

Depends on price of Natural gas. It is tied to the underlying commodity. Would suggest producers that have a mix in the commodity. Will be a frustrating stock. We are at a 6-year low in Nat Gas.

PAST TOP PICK

(A Top Pick Sept 9/10. Down 17.16%.) When this was picked, he called it a 2-year story, but maybe it is a 3-year story. Still likes.

DON'T BUY

Nat Gas has stabilized and wills stay around same price. Cut back CAP X program. If there is a recession Nat Gas prices will fall and affect the cash flow. Prefers more oily producers.

PAST TOP PICK

(Top Pick Aug 25/10, Down 12.37%) He was early on this call. One of the biggest Nat Gas participants in North America. Good balance sheet. They can survive what has happened to natural gas. In the longer term this stock could do extremely well.

TOP PICK

One of the premier companies in unconventional natural gas. Gas has been depressed and may continue for a year or two. A dominant player. Management has shown they are innovative in how they develop properties, yield in excess of 3%.

COMMENT

Doesn't think natural gas will stay down forever. Looking at the futures curve, he sees a higher price in 2 years.

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Encana Corp (ECA.TO)