Encana Corp (ECA.TO)

This is a fine company, he says. There remains funds flow out of this sector and this is hurting the large caps like this one.

(Past Top Pick, July 21, 2017, Up 37%) Tremendous assets with many in America. Great management. He wouldn't buy more today, but would hold on.

5 times earnings. It might go to $18 a few years out, if oil does well. That is the bigger call. ECA-T got out of Canada, made an acquisition and paid the debt down. It is a decent play on energy. It is behaving much more like a US energy name.

Solid. Always liked it. $16 target. Hold on, but be ready to pull the trigger.

It has been focusing on selling off non-core assets. Core assets grew by 30%. They are planning to grow production by 18-35%. They were mostly a natural gas player and now have moved liquids percentages up. Splitting it up was a big mistake. There may be some more downside and then it will go up. He thinks there is an energy bull market coming.

Been in the $9-14 range, so it looks like a "goal post" stock. Likely won't move outside this range. Reward yourself at $14 and sell.

The balance sheet has gotten a lot better, but still not ironclad. Trading at 2.2X Debt to Cash Flow for 2018. If oil/gas gets really challenged, that could be a problem. It’s still not cheap on a 2018 multiple, but they have really nice production growth. Thinks they are going to do 17% over his forecast, which leads to Cash Flow per share of about 35%. Balance sheets are going to look a lot better in 2019 and their valuations are going to start to look better at that time. They had a bad debt situation a couple of years ago, but have had a Herculean turnaround. He probably would not want to be in the energy sector at these levels.

His big holding has been SU-T which has done relatively well because it was east/west upstream/downstream. It has done very well. Companies like ECA-T and CVE-T have been hit hard and smaller ones have been obliterated. Oil is a long way from $25. With the uncertainty and the threat of civil war in the middle east, companies like this could continue to do very well.

The market tries to like it, and then gets overwhelmed by commodity prices. Although we are enjoying nice weather, that is not good for natural gas prices, so it’s pulled back again in the short term, and the group has pulled back pretty substantially in the past couple of weeks, so the 2-week outlook doesn’t look so great, even though the storage situation is not too bad. Being big and liquid, this company is viewed as one of the 2 “go to” gas names for Americans. He would prefer something with a bit better growth if you are going to go to gas, such as Paramount (POU-T).

He doesn’t care much for this. It closed at $14.17 and his model price is $15.08, a 6% upside. Pays a very puny dividend. He would prefer others such as Imperial Oil (IOL-T) or Suncor (SU-T).

Sitting on a very good property in the Montney, and everybody is excited about shale now in Canada. He is not big on fossil fuels, and doesn’t own any. If he were going to own any, it might be this company because of the quality of the real estate they are sitting on, and that gas is the future of energy.

It had a huge run over the last 4 or 5 weeks and now the period of seasonal strength comes to an end. Nat. gas prices have broken key support levels so it does not look good for this one. This year we are in a downward trending. Take some money off the table and look for better opportunities.

They’ve done a really good job to improve themselves. Their debt to cash flow is 2.3% for 2018, which is not bad compared to where they where. The valuation is really improving at 6.9% for 2018 versus 7.1% for its peers. The energy space continues to be very challenged. He only sees 2% production growth. This would not be his favourite name in energy.

Got hurt in the oil/gas downturn, because they made asset acquisitions at high prices. The assets are working, which is the good news side, but had to do a lot of house cleaning. He just wants to avoid bad balance sheets.

This is known as a gassy stock, so it is going to follow the trend of natural gas. Last year, they moved very well. Yesterday, the stock broke above short-term resistance, and has established a very faint upward trend. Stick with this until approximately the 2^nd week in December.