Steve MacInnes Nuvista Energy Ltd NVA-T TOP PICK May 15, 2008

He may be early on dry gas producers. Here, you get the gas but also condensate. Condensate's needed for pipeline transport as oil sands slowly increase production. Canada's already short on condensate, so the premium's been extending. Growing production by about 50%, at which point it can keep production flat for 20-25 years. No dividend.

Shareholders are already getting 75% free cashflow. Meaningful share buybacks compress the multiple and drive the rerating. $20 target in 1 year, $26 in 2 years, so upside of 50-90%.

Second largest shareholder. Owns shares in company. Condensate exposure very good. Natural gas pricing not a concern. New CEO looks great. Very strong company. Dividend looks safe. Business model is sustainable down to ~$60. Expecting $16/share @ $70 oil. 

It takes discipline to not take profits too early and let your winners ride if the thesis is still playing out. The investor did well to do that, not many can.

Believes his firm is still the second-largest shareholder. Continues to drill exceedingly great wells. Perception of an inventory challenge, but he doesn't agree. Likes the newish CEO a lot. Low growth, but lots of free cashflow. Speculation that POU will buy it out, but he never owns on M&A spec.

She sold this a year ago. She expected after their spin-off to improve margins and product line, but the dental industry is cyclical and tied to the job market. As interest rates rose, many patients deferred treatment. Also, it's in a competitive market and growth was soft in some geographies. Wait and see how the new CEO executes.

Is a major shareholder. Is deep value here. They will grow production by 50% over 5 years while free-cash flowing 70-80% of their current market cap in that time. If/when they hit peak production of 120,000 barrels/day in several years, they can keep their inventory flat for 30 years while cash flow will be mind-blowing. He buys in every dip. He sees 50% upside in one year.

In his aggressive fund. Choppy pattern, which he likes for swing trading. Support ~$10, resistance ~$14-15. Could drop a bit more from here. 

Offers near-term leverage to a bullish outlook for natural gas, plus long-term exposure to a very bullish outlook on oil. 60% gas, 40% condensates. Very deep resource base. Growing production over next 5 years by ~50%. Also buying back 30-50% of shares at $60-70 oil.

Once production targets are met, its plants will be filled, and the plan is to return 100% of residual FCF back to shareholders. Exceedingly strong balance sheet. Likes the CEO. No dividend.

You get exposure to natural gas and condensates. NVA is growing production by 33% the next few years, then will plateau production which they can do for 28 years. Wait for their share buybacks to happen over time. At $4 nat gas and $60-70 oil, NVA can buy back 33-52% of their stock over the next 5 years while they grow production by 33%..

Chart shows a pretty positive pattern of an "ascending triangle", which is a really powerful one in technical analysis. You're seeing a series of higher lows because investors continue to snap up the stock on the move higher. What you're really looking for is a breakout of the multi-year range. Rated "outperform" by his fundamental analyst.

Take a look at the 5-year chart. You can really see the longer range. "The longer the base, the longer the time in space." Meaning that when it goes, it really starts to move. Now testing the upper end of the range. Further USD weakness should be a real tailwind for commodities. No dividend.