Peyto Exploration & Develop. (PEY.TO)

Canadian investments have been constrained politically. He wouldn't be surprised to see nat gas prices trend lower over the summer. Next 3-5 years should see them higher. The current Canadian PM is anti-energy, but also pragmatic on the need to fund deficits. If the political headwinds disappear in Canada, companies like this one will do extremely well.

It's been pulling back after an uptrend. It was overbought. He likes oil and gas. It might sell off a little more, so buy it. A well-run company and best in class. They will make money if oil prices are higher than in January.

Whenever this falls back to its trendline, buy  it. The first-year chart shows a gentle uptrend. It just pulled back to the neat-term trendline. He owns a large position. Would add here.

If you already have oils in your portfolio, don't buy now. If you share his thesis that the Strait will be challenged with only some traffic going through, then we're probably looking at $80-90 oil. Canadian oil companies are at a massive advantage because we're really trying to expand our markets.

For a 5-year horizon, CNQ looks really good. On the nat gas side, he likes TOU and PEY.

His bias is toward natural gas names right now. Natural gas is a long-term solution to all the green problems in the world. Stability comes from market demand from data centres, etc. Perfect intermediate fuel between today and nuclear power.

Sell now, it's fully valued. The PE multiple is fair. He'd love to rebuy. Likes its pragmatic approach to hedging, deep inventory, underappreciated well results. 

Really great job on its acquisitions. Trades at a modest premium, partly due to the hedging it has in place this year at roughly $4.04. As it pays down debt, expects significant dividend increase (20-25%) in second half of this year. Could potentially acquire part of the CVE package rumoured to be up for sale. Healthy dividend of 5.5%.

Both are higher-torque, higher-beta energy stocks.

She picked up a small position in TOU. Looking at the chart, an opportunity for it to play a bit of catchup. Pretty much flatlined for last couple of years. A story of quality and scale -- bigger inventory, better balance sheet, more flexibility across cycles. Investors trust the name, cost structure, and capital discipline. Plays defensive a bit better in a weak gas market. Multi-cycle compounder. 15-20% upside potential from here. Look to add at these levels.

PEY is a gas price trade, and is already at analysts' target now. An income name. Poised to throw off some cash when gas prices recover. Works best when nat gas prices rise quickly; can downdraft just as fast when prices soften.

A great nat gas play. He bought this 2 years ago when it paid a 14% yield. Concerns over capital structure are gone, because of earnings they've made the past two years. Is a go-to name in nat gas.

Doesn't own now, but no qualms about taking a position, given the constructive view on natural gas. 

A somewhat smaller producer of nat gas, with ~$4.5B market cap. Operates in Western Canada, but in the Deep Basin. Produces close to 90% natural gas, so almost a pure play. Production has grown ~4% compounded pace over the last decade. Company has had ups and downs; enjoying an "up" now. Had to cut dividend 3 times (2018, 2019, and 2020), cumulatively 95%. Incredibly, under new management it's grown all the way back. 

Keeps costs low. Diversifying end markets away from low price points. Catalysts on horizon for whole nat gas sector -- LNG Canada plus "major projects". Yield now ~5.9%.

His preferred exposure to nat gas is via TOU. 

Believes it has 20 years of booked drilling inventory, with another 20 years unbooked. So roughly 40 years of stay-flat inventory. Recently bought extremely good assets for a song. As it continues to de-lever, sees increase in dividend by 20-25% around second half of next year. Yield is 5.88%, quite attractive. 

EPS of 45c beat estimates of 43 cents; revenue of $310.2M beat estimates of $299.8M. EBITDA of $231.8M matched estimates. Sales rose 19%. Production rose 8.1%. Capital budget for 2026 is $450M to $500M. Cash costs were good at $1.21/Mcfe. Debt fell $20.5M. We are comfortable with these numbers.
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Good chart, nothing negative to say. Solid upward trend developing. Natural gas does well this time of year. Seeing more demand for nat gas. Nuclear's great but we need to get there, and natural gas is the way.