Suncor Energy Inc (SU.TO)

SU-T vs. MFC-T. As interest rates rise, this is better for insurance companies. This will cease to be the case if the central banks tighten so much that it sparks a recession. These companies get hit more during economic downturns. Insurance companies will not do as well this late in the cycle.

(A Top Pick May 9/17, Up 30%) It is behaving well because of the oil price. They have long lifed assets and this thing is becoming a cash machine. The only issue is getting production out of the country. Their issue in the oil sands is a short term issue.

He thinks they have Syncrude operational issues and thinks it will continue to become more unreliable – especially now that Suncor is operating it. The refining exposure is good to battle with heavy oil differentials. He prefers CNQ-T based on free cash flow and dividend growth.

He views this as the largest energy company in Canada and suggests it will react to positive cash flows faster than any other energy stock and sees the balance sheet as well balanced. He likes holding it, but he has gone lower down to the smaller cap energy stocks to get a better yield, such as Vermilion (VET-T). (Analysts’ price target is $57.67)

Suncor vs. Husky (HSE -T) Which has more room to grow? Both in same wheelhouse. Both have done well in downturn, Suncor a bit better, with decent dividend, good free cash flow, buying back stock. You could own Suncor and be happy. If you want the income, go with Suncor. Husky has less actual growth, but more upside, so if you want the appreciation go with Husky. You can’t lose with either, they’re both great.

There was unwelcomed news earlier in the week that took a facility off line in the oil sands until later in July. They are a pioneer in Canada. They have a 36 year reserve life so one month of lost production is nothing. They produce crude oil and then upgrade it and refine it. This integration and their refineries and network of 1750 gas stations allows them to avoid the vagaries of oil price variations. Their capital expenditures are stepping down meaningfully this year. This facilitates their ongoing pace of dividend growth and allows the buyback of more shares. (Analysts’ target: $57.35).

He thinks the company will peak at 58 and might pull back to $42, which is where he would buy it. PAST TOP PICK

Their fortunes are tied to oil. Largely at his target trading at a premium compared to its integrated peers. What is good is that they beat by 3% last quarter. Balance sheet is great. Dividend is very safe with a payout ratio of 53%. Everything is good with this name except the price. At this level he would sell a call. If it pulls back, he would accumulate it by writing a put.

You are sitting in some euphoria. He would wait for a pull back to get in. You might want to buy it then. This is a great success story.

It's one of the best integrated oil ompanies. Great balance sheet. Always improving their cost structure. Not an expensive stock. He used to own it. Well-run. Great company. As for oil, it's stuck between $60-80, and oil dynamics are really hard to predict, especially with shale oil coming on as the price falls. In Canada, we have a huge differential because we can't get oil out without more pipelines.

(A Top Pick April 28/17 Up 25%) He still likes holding and is his largest exposure to the energy sector. They are the benchmark for the Canadian energy industry being diversified and integrated. This remains a core holding. This will benefit if the recent pipeline decision will bring favour back to the sector. Yield 3%.

Don't add to a losing position or sell it here given the recent drop in oil. He likes this name.

It will act differently from the oil producers, because they operate refineries. If you expect WTI to reach $80, Suncor is not the best good bet, though it's a safe bet due to their refining and marketing operations. He expects SU to hit $55 in a year. But if you want serious upside, buy something else.

Reasonably positive on the oils. Oil is going to stay in the $60 to $70 range. His concern is oil sands vs shale south of the border. Expensive sector of the market. Until the pipeline is not sorted out there is a big question mark. Good company. You get some of the downstream advantages.

He avoided energy for years until last February. In Canada, his largest position has been in the oil sands, because these companies have invested in past years and are now looking profitable. Suncor has low decline rates in its production compares to its peers. With oil at $60-70, this will do well and attract global buyers. But remember: oil is cyclical and addition supply can come on from other sources. Overall, he likes Suncor.