Husky Energy (HSE.TO)

They suspended the dividends but there is an expectation they are going to restore it. Going sideways, fairly good development overall. We are not in the seasonal period for energy. It can be a little weak in January. If it get closer to $19 level or so, that would be a good technical buy signal. We’ve seen some pickup with higher lows so technically this looks better as we get into the seasonal period for energy stock.

Sell and buy Enbridge (ENB-T)? You are on the right track. He would get rid of this and buy Enbridge. With energy infrastructure, you are getting very predictable cash flows. It is tough not to like Enbridge considering that it accounts for about two thirds of the oil that crosses over the Canadian and US border. Also has a backlog of over $25 billion that they should be able to execute pretty seamlessly. That translates into mid-single digits/high single digits cash flow growth.

Sell? The consensus is $17.50, an 8% upside, versus a large cap peer average of 15%. He doesn’t know what is exciting on the story, and would Sell and move on.

There is not much growth in the story and the stock had really come down. Everyone is waiting for the dividend to be reinstated. This is a good name if you want a conservative story but wait until the dividend is reinstated.

Oil is probably $50 plus or minus $10 for some time. HSE-T over the last year peaked when oil was in the mid-$50s. It is priced for $50 oil at present. We are in the middle of its trading range. He has been lightening up a little on oil recently.

It was a darling to 2008 and then bottomed in 2016. The balance sheet has been repaired. They have a fabulous balance sheet and are trading at a significant discount to book. The question is growth and they are not showing any volume growth. People need to see the ability to grow. The company has not communicated a game plan for growth.

Will they be raising their dividends? They have 3 conditions before raising dividends. 1.) Balance sheet being repaired, which has been done. 2.) Getting free cash flow in order to have money on a sustainable basis. 3.) Stabilization of the commodity, which he feels won’t be until 2018. This is now trading at a discount to BV, so it is a cheap stock, but expects it will get somewhat cheaper in Q4.

They missed a little. $.71 versus what the market was calling for of $.73. Production was in line. Thinks the market was concerned when they didn’t reinstate their dividend. Feels management wants to wait until things are more stable. The balance sheet is really ironclad, and it is trading at a really good valuation versus its integrated peers. They have 4 quarters in a row of real positive cash flow. He sees the dividend coming in Q4. A great name to be owning if you think that oil has stabilized. This is one you could probably sell Puts on.

They tried to repair the balance sheet, so it sold medium stream assets. Took the debt down from $5.7 billion last year to $4.7 billion. They’ve taken cash up to $1.3 billion. Equity is a very big component at $17.6 billion, so they are in pretty good shape there. BV is $17.53, and the stock is trading below BV. However, volumes are down on the year. They will be adding on more production by doing 10,000 barrels a day thermal projects. As those come on and they have more long life assets, that will be a positive. He likes that they are going to be adding more volumes in China. As the balance sheet repairs and as we get over $60 a barrel, maybe in 2018, they could reinstate a cash dividend again. He would continue to hold.

She prefers other names in the integrated space. But it is probably a good trade right now. It is likely they will re-instate their dividend once we see the stabilization in oil prices.

A big integrated oil company. If you are bullish on oil prices then they are a buy. It is a bet on oil prices. He thinks oil prices have bottomed. (Analysts’ target: $19).

This is a value trap. It will never garner any semblance of a multiple due to the ownership.

This has done a pretty good job. They have assets in Western Canada as well as a natural gas play in Asia. Also has a Western Canadian refinery. They’ve done a decent job, but he prefers Crescent Point (CPG-T) or Cenovus (CVE-T).

It is a cheap stock right here. They are sitting on 1.2 billion of cash. The basic problem is that production has been declining because they had been selling off assets. He give management lots of credit for cutting costs. They have lots of projects. Longer term it is a name you might want to own. You may be able to buy this below $13 if the oil price comes down $10-$20 during 2017.

(He owns some of their preferreds.) If he didn’t already own Suncor (SU-T), this might be one worth looking at. They have good assets, and he likes the refining business, which is going to work well for this company. Thinks they may bring their dividend back.