Imperial Oil (IMO.TO)

They have a tremendous record over the last 15 years. They have very low costs (about $10) and so generate great profits. They have one of the best production profiles coming on over the next 10-15 years. They are very patient with their capital allocation. Probably one of the best managed oil companies in the world.

This company got knocked down with the rest. Has good assets, good production and has heavy oil. One of the better quality ones. In the long-term, this is a very safe bet in the oil industry. He prefers higher yields in some of the others. 1% dividend yield.

Chart shows a large period of an elevated base, followed by a breakout in 2013. The longer the base, the longer the move in the upside. Not too excited about the crude producers, but the integrateds are a different story. They profit no matter what.

A 57% upside to get to his model price. It is starting to move.

This is a company that he has been Short in the past. He tends to use this as a proxy for hedging out his Canadian crude oil exposure. About 3 months ago he decided to cover his position because they seem to be getting their act together. As a long-term holding, he has no objection and is largely indifferent to it.

Stock has gone through a long sideways correction for about 8 years, and waited for its BV to catch up. ROE gives a 17% annual rate of return, and has been doing that for about 7-8 years. His FMV calculation would be around $75+. His target is $65. Yield of 0.93%.

Has not been participating with the Canadian oil patch recently. It has lagged a bit. The dividend is less than 1%. There is no compelling reason to own this over SU-T, CVE-T or CNQ-T.

(A Top Pick April 23/13. Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). Down 34.23%.) (See comments under TAO-T.

Have a lot of things going for them in terms of production that is coming on. Although it has had a good run, it may have some distance left to go. Extremely well managed. Not sure that Keystone will be built but thinks oil will move out of Alberta so increased production should commence with reasonably good prices going forward.

A massive conundrum. If it gets cheap enough, he will try to own it. Its rate of return on its oil projects is extraordinary. The problem is the last project that was built in the inflated cost environment of the oil sands. It could make IMO a 30% overvalued stock. He prefers to sit on the sidelines.

(Market Call Minute.) Valuation is always much higher than the peer group. There have been some problems with the Kerl project and not sure that it is perfectly fixed yet.

This is one that he would overweight in a portfolio. His model price is $78.10, a 75% upside. (See Top Picks.)

Thinks there will be a little bit of a lift in this company. Their Kerl project is coming on board. It has been in the making for a long time. Watch the production come from the Kerl project.

Are going to be doing deep drilling in the arctic once again, which surprises him. Prefers CNQ-T because of lower price to cash flow ratio.

(Market Call Minute.) Had a big pullback from about 4X Book to about 2X Book. He is intrigued at these levels.