Opinions
Eric Nuttall
Headwater Exploration Inc.
HWX-T
BUY
Mar 11, 2025
Stock price when the opinion was issued
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Premium contentPremium contentWe reiterate HWX as a TOP PICK. Management reports production remains on target for annualized production of 20,000 boe/d for 2024 and capital has been allocated on several projects for the balance of the year. It trades at 11x earnings and supports a 27% ROE. Its dividend is backed by a payout ratio under 65% of cash flow, which still allows quarterly cash flow to grow. We recommend trailing up the stop from $6.25 to $7.00, looking to achieve $9.00 -- upside potential of 20%. Yield 5.4%
(Analysts’ price target is $9.32)Premium contentOur PAST TOP PICK with HWX has triggered its stop at $7. To remain disciplined, we recommend covering the position at this time. When combined with our previous recommendation this will result in a net investment gain of 2%.
Small-cap yielding 8%, sustainable in low $50s. Wouldn't be surprised if it dialed back capex, which makes the dividend even more sustainable. Almost a pure play to Clearwater, an exceptional resource. Owns in his income fund, on his list to add to the main fund. Inexpensive. Respected management.
Company's done nothing wrong, excellent balance sheet. Hard-pressed to find an oil company stock chart that's up while oil is down. Still believes in the great strides it's making. Yield is ~7%, fully defendable down to ~$53/barrel. Total return will be fine, even if oil price is not doing too well.
Very well-run mid-cap, yielding 7.5%. Other stocks may have better valuations, but HWX has done a great job in the Clearwater, but prefers Tamarack. They have several successful explorations to expand their assets. This offers modest production growth and a juicy yield. He targets $9.