Suncor Energy Inc (SU.TO)

Attractively valued, trading at around 12% free cashflow yield at $60 oil. Would go up to 17% at $70 oil. Big underperformance relative to CNQ. Good upside, even up to 50%. More than that at $70 oil. Sold to buy small cap oil companies. Preference for other names.

Has lagged CNQ and other companies due to them cutting dividends. Likes it for the long reserve life of lower-cost oil sands that is run well. The downstream integration is very good. The financial strength of the company makes it better than mid-sized or smaller producers.

If oil is going to do better then this one is going to do better. The oil space in Canada is starting to heat up. You have demand coming back and some of the Canadian egress issues are no longer a factor going forward. There are a lot of positives going forward in the space. CNQ-T is also a very solid holding today.

The whole reflation trade is a trade. Oil stocks have been beaten down for a while. For a trade, the energy price pop is good. However, as a long term trend, they are not investable since there is a move away from traditional energy. He has no preference between CNQ or SU. He is overweight energy right now.

He would prefer SU for the dividend but there is risk that it will be cut. CNQ is a little more natural gas as well.

Trades at 8x earnings. They've done a great job keeping costs down and moving to self-driving cars during Covid. Also, it's an integrated company with a great retail network. They're in a good position to manage this difficult time in the oil market. This and CNQ are stable oil businesses in this time, best in this class.

It's one of his few core energy names; he's underweight energy. He's added to his position. They won't build any new oil sands plants. They enjoy long-life reserves and low costs. A great, long-term core hold in oil. He also likes Tourmaline and CPG, and pipelines. See also his top picks today.