Opinions
Eric Nuttall
Imperial Oil
IMO-T
SELL
Apr 15, 2025
Stock price when the opinion was issued
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Premium contentMarkets have factored in lower oil prices into the share price, but as the company is also a refiner, its downstream segment will benefit from lower feedstock costs. It trades at 12x earnings, under 2x book and supports a ROE of 21%. The company will announce latest financial results today -- we'll see if they are able to continue growing cash reserves. We recommend setting a stop-loss at $67, looking to achieve $103 -- upside potential of 16%. Yield 2.9%
Premium content(Note the short timeframe.) This is a swing trade. Looking at the chart, you can see how the stock likes to go down to $90-ish, and then go up to $100-ish. That's 10% that you can trade and trade. He always buys on the bounce.
He feels that all oil will break out eventually. He's hoping to get $100 on this, though it's pulled back a bit. If it gets there, he'll probably sell and then get back in if it returns to the bottom. If it doesn't, his buy price was close to the bottom so he isn't losing anything.
Basic premise is that Canadian oil companies have unbelievable assets. Well north of 20% dividend growth. Great cashflow and shareholder returns. Oil's just broken a triple top on a point-and-figure chart, and these companies look as though they're about to reaccelerate.
He'd buy this one, and he'd buy CNQ.
Premium contentOil & gas sector has been consolidating. This name is breaking out to new highs, and that's a great tell. 25 years of reserve life. Three separate issuer bids, with another right now. Very high quality. If the commodity cycle goes on, energy will likely participate. These stocks should normally be weak this time of year, but they're making new highs instead; tells you there's lots of upside. His call is for longer-term higher oil prices.
Great company to protect your purchasing power. 30 years of consecutive dividend increases. Yield is 2.55%, with compound annual growth rate of 22% over last 5 years.
Performed very well. Aggressively buying back stock. Trades at a deserved premium. But today he'd prefer CNQ. Good tax-loss candidate. Very strong balance sheet. FCF today is not what it was.