Surge Energy Inc (SGY.TO)

Owns this in his income portfolios. Very well-managed. Thinks this will continue to grow via the drill bit like it has been. Could see it eventually as a takeout target. A lot of insider buying.

Compared to Whitecap (WCP-T) and Torc (TOG-T)? These are all dividend growth stories with good management teams. All 3 are definitely in the top quartile. Likes this one quite a lot, primarily because he knows the management team. CEO has been a very aggressive buyer of his own shares. This is a company that has done some deals quickly, have raised their dividends at least twice over the past couple of quarters, production growth looks good with a rock solid management team in terms of geographic focus and asset mix.

Pays a good dividend. A little less volatile than TOU-T. It moves around and you have to be ready for it.

Chart shows a breakout at around $7. It is perfectly natural for a stock that has broken out of a resistance point, to retest. That looks like what is happening right now. It has had a little bit of a pullback and might retest the $7 area. You want to see the test successful, in other words, hit $7 and bounce off. If that happens, the stock looks strong.

Raised their dividend 3 times in the past year. Have been growing by acquisition. Now is harvest time because in their acquisitions, they will get at, and extract more value out of those assets. The one thing it doesn’t have right now is yield respect i.e. it trades at a pretty healthy yield in a market where the best trade at 4%-5%. Thinks this company will become one of the best. Don’t discount further dividend increases.

(Market Call Minute.) Their yield is too high for the assets that they have, therefore she thinks the price should go higher, which will lower the yield.

Unless we get a correction in time, it may come down to $7. He would not worry about it on a short term basis. Thinks these names will roll over again in later July. Add to it below $7

This is not contrarian in any way, shape or form. It has a lot of characteristics of the old income trusts and of the ones that got into tremendous trouble. Have zero cash, and just increased their dividend as they take over another company. Increased their debt load and shares outstanding. Looks at this as a stock with a tremendous amount of danger. This will be fascinating to look at in 5 years time, as they will have done really, really well, or may sell off non-core assets to raise money. Wouldn’t go close to this.

3-year chart was compared with its peers through the iShares Capped Energy ETF (XEG-T). There was a huge spread in early 2013, probably due to interest rate fears, but the spread shrunk all of a sudden and got much smaller. It is now becoming a “market perform”, which is a good sign. One year chart indicates it definitely has more upside. 7.7% yield.

There are 6 or 7 mid-tier companies like this that he really likes because of their growth spectrum. Management has been able to deliver on the production pickup. He wouldn’t just own one, but would have a basket of them.

Likes this. His “Reduce” support line is at $7.20, and the “Sell” support line is at $6.37. A typical energy chart in that a lot of them have moved up and are pulling back a little bit. Will have to wait and see where it breaks out.

Just did an acquisition. Maybe a higher risk name, but you can get paid a nice dividend. All-in payout ratio of 89% for this year. Likes it. The risks are in credibility and execution. Make sure they do what they say.

(Top Pick Jun 20/13, Up 52.96%) Bought Long View. He is cautious in the current state of assets. Now prefers other names.

This has been doing a good job. They have been using a strategy of acquiring underappreciated assets that have lower declines. He would caution that this is a marketing darling, and the appetite is pretty good for it. He would prefer Crescent Point (CPG-T), but wouldn’t have a problem with this if you wanted to move out the risk spectrum a little. (See Top Picks.)

Oil/gas is very capital intensive. You spend a lot of money to drill holes in the ground. Every barrel of oil that you sell, you have to find another barrel of oil at an economic value. Having to pay out high dividends is an expensive proposition. Paying out more in dividends and its capital requirements, to maintain production at a flat level then it actually earns. The mere fact that the stock is yielding so much, tells him the company is fatiguing investors by buying assets and selling stock and paying out dividends. If you look at the stocks that have done well in the last 3 years, they are the ones that have been growing production and not paying dividends.