Stockchase Opinions

David Burrows Imperial Oil IMO-T TOP PICK Apr 03, 2024

An alternative to CNQ. Returning capital to shareholders. Debt levels are down to 19%. Dividend growth north of 20%. Has grown dividend 23% a year over the last 5 years. Energy is one of the most under-owned sectors in the world. Good value and good total return. Yield is 2.5%.

Higher oil prices are better. But Trans Mountain pipeline is going to take a bunch more oil from Alberta, and so the differential on Canadian vs. US oil will continue to squeeze in. There's also been a pickup in volumes. He thinks the pension funds and foundations are going to have to own this sector again.

(Analysts’ price target is $89.00)
$97.800

Stock price when the opinion was issued

integrated oils
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PAST TOP PICK
(A Top Pick Apr 03/24, Down 4%)

Very bullish on energy. Strong cash flow that continues to be returned to shareholders. Expecting capital appreciation as energy stocks added to portfolios again. Will continue to hold shares. 

DON'T BUY
Caller's first job was mowing grass in the 1970s at an Esso tank farm (they paid for his university education), and he still holds the shares.

The old Esso. Great company, but better names to own going forward. If an investor has owned since the 1970s, they've done really well but probably sitting on a heck of a tax liability.

TOP PICK

Rock-solid balance sheet. Great long-life assets. Operational excellence. Cashflow-generating machine. Bought back 1/3 of company's shares in last 7-8 years; that will continue. 5-year dividend growth rate is 23% a year. Pricing power. A company that will offset inflation. Yield is 2.5%.

(Analysts’ price target is $102.21)
DON'T BUY

Very well run company. Trading at premium to other energy companies. Safe company with excellent inventory. However, better options out there for investors. 

WEAK BUY

Oil prices weak recently, generally gets a little firmer coming into winter. Lots of Middle East conflict. US energy producers in general have performed much worse than Canadian, partly because of debate on whether shale can sustain production. 

Longer term, the sector is attractive and these companies will generate a ton of cash and strong dividend growth. Near-term technical questions. He'd love to see price of oil stabilize. It has in last couple of days, but that's geopolitically driven.

BUY

The ZEO ETF recently broke out to new highs. In the group, he likes CNQ, IMO and SU.

WEAK BUY

Good business. Alberta oil sands are low cost, long life, low decline. Refineries. Integrated, with benefit being that it takes the raw edge off commodity price sensitivity. Owns this indirectly through the back door, with an investment in XOM (major shareholder of IMO).

Modestly bullish on oil. Not his first choice, but no quarrels with it either.

TOP PICK

Sideways trading range. Reported earnings today. Should not be affected as much by potential US tariffs, as energy may be exempt. Boring, blue chip. He likes energy, and this is a way to play. Yield is 2.9%.

(Analysts’ price target is $104.28)
TOP PICK

Bought this around $92 with proceeds from CNQ. Attracted to the chart. A swing chart, easy to trade. Hopes it'll go to at least $105 or so, which is when he'd probably sell. Yield is 3%.

(Analysts’ price target is $104.56)