Surge Energy Inc (SGY.TO)

This is getting whipped around like all energy stocks. They just made an accretive acquisition. The balance sheet is now very reasonable. Payout ratio is 94%. Pays a 4.1% dividend. 4.8x valuation. He likes it, but wouldn't throw a lot of money at this until the oil patch improves (the wide WCS discount vs. WTI). You can hold onto it. Oil in general won't improve until pipelines are built.

He would avoid this one as it is a small cap stock that investors have no interest in presently. It has failed to gain any institutional interest. Without that support, valuations will not improve. There are better opportunities out there.

Schachter has liked this company for a long time. The company is in the midst of an acquisition ($320 million) that will add significantly to its production. The dividend will increase if the acquisition goes through. He has a $3.70 12-month target and an $8.70 target for the cycle (2023). Yield is 5%.

(A Top Pick September 15/17 Up 36%) It has turned things by deleveraging and doing a key acquisition that the market liked. He looks forward to seeing the company trade back to normal mulitples and looks forward to a 14% return.

The company is generating 30% earnings growth over the year and a similar growth for production per share. They have low debt and a great yield. He is projecting significant growth in earnings going forward to help reduce the high cash flow multiple. They are increasing their production and if oil moves back to $80, this stock will trade substantially higher. Yield 4.0%. (Analysts’ price target is $3.51)

He likes it and is on their coverage list. It is trading significantly below book value. It is a very cheap stock. Book value is $3.32. This stock is a definite buy under $2.00. He has a 1 year target of $ 3.70 and a 3-5 year target of $8.00.

The balance sheet has 34% debt. It could be an $8.50 stock over the next year.

There are other management teams he likes more.

The story is really improving with higher oil prices. Balance sheet looks better now. Valuation is in line with peers. A small cap with a dividend that looks OK. Other companies offer better opportunities, but a story that has improved.

It is on his action alert list. His target is $3.70 this year and $8.50 over the next 3-5 years. The balance sheet is decent, $246 million debt versus $776 million equity. The company is doing 15,700 boe/day, they are 80%-plus light oil. They have a 60 cent cash flow. He thinks the stock could back off into the low $2’s. The stock offers a 4% yield. Below $2 it is a table-pounding buy.

(A Top Pick June 12, 2017. Down 9.98%). This has a great balance sheet and a high dividend. The debt is $246 million against $776 million equity. Book value is $3.33 compared to the price on the day of the interview of $1.95. The company traded at 1.7x book value in 2014 so it could be a $5 or $6 stock. His target for Surge for 2018 is $3.70 with a yield of about 5%. In this market, a good price for this company is $1.90 and a price of $1.80 would be excellent.

Good management and their 5 year plant tries to balance sustainable dividend and capital investment. It is not a well owned stock, almost 80% retail. Through the down turn management have been able to demonstrate the sustainability of the business model. Healthy growth and efficiently bringing debt down. He looks for moderate capital appreciation.