Suncor Energy Inc (SU.TO)

This is more of a cyclical trade than a long-term secular trade.

3.1% yield. You should own the larger cap names given the uncertainty with what Trump will do. Their cash costs of oil extraction have been coming down over the last little while. They did a good job of making acquisitions at the right time. They will drive their costs down even further. They can increase their dividend.

The issue is the oil price and the ability to extract oil at a low cost and move it into the market. They did a good job of being able to get it out of the oil sands. Fort Hills is coming on. Everything is favourable. He owns it and likes it and they pay a nice dividend. If oil prices stay at nice levels this will be a great name to own. He wants to own the ability of the assets to earn cash flows for his clients.

The absolute winner in the Canadian energy play. The stock has done very well and has not been hit like many of the others. They have the balance sheet, they have the assets, and they are in a position of either high energy prices or low energy prices to continue to build their company, and acquire good properties on the cheap. He still likes this.

(A Top Pick Jan 7/16. Up 25.58%.) Still one of his favourites. Sort of the benchmark in the Canadian industry. It is the largest and most diversified. An extremely well-managed company. At the current price, he wouldn’t be running out to buy it. Prefers to get it in the mid-$30.

His bias is towards smaller companies of $3-$5 billion. This is the largest constituent of the index. When he looks at this, he thinks of boring, low growth, a company with a lack of meaningful take away capacity, a company imposing massive carbon taxes. He would prefer a smaller, more nimbler company with a higher ability to grow production such as Cardinal Energy (CJ-T) or Whitecap (WCP-T).

The large player in the Canadian oil/gas sector. If you think oil prices are going to continue to trend up, then it is one you want to invest in. He tends to look for companies that have a more accelerated growth profile, so he goes into smaller companies that have more of a production growth profile.

He sees this having 16% production growth from 2016 to 2018, resulting in 22% cash flow per share growth. They easily pay their dividend. The only thing he doesn’t like is that it is trading above its peers at 8.8X, versus its peer average of 7.9X. Try to buy at a slightly lower level.

(A Top Pick Aug 17/16. Up 21.34%.) This had really terrific results shortly after he had recommended it. A very well-run company. It doesn’t face a lot of the same type of problems that a lot of energy companies face. A very disciplined and well run company.

This is the goto name, the largest cap name and one that Americans love to own. Fort Hills is just being finished up and will give them a bounce in the volume this year. They have done a very good job of driving costs down. If we break $40 oil then you will have another great purchasing opportunity.

Long term it is probably not that great. He used to be short, but covered it when he became a little more constructive on oil. The long term picture for someone in the oil sands is not that great.

(A Top Pick Nov 22/16. Up 4.17%.) A really solid oil/gas, and he thinks the oil/gas area is a good place to be.

The benchmark in the Canadian energy industry. It is the most integrated having both upstream and downstream, oil sands/conventional. Extremely well-managed. For years and years, this always sold at a discount relative to the group. They have some of the best assets, and are in the best position as well as being the most diversified. If you have long-term faith in the energy industry, this is a stock you want to own.

Has been negative on energy for several years now. The good news is that oil is no longer in free fall and has set a bottom, and is starting to creep back up. However, we are not out of the woods yet. There could be continued pressure in oil prices. This company is a great way to take a conservative step into energy. They are fully integrated, which helps to add some balance to their earnings. Dividend yield of 2.71%. (Analysts’ price target is $47.60.)

Trading at about 7X on an enterprise value to debt adjusted cash flow. He can find companies that have a greater free cash flow profile and cash flow growth profile than a large cap like this. Syncrude, which has actually been a pretty poor performer in terms of reliability, managed to have a 98% reliability in Q3, which is pretty good for them. Comfortable that about 70% of Fort Hills is complete, and that it and Hebron are both expected at the end of 2017.