Suncor Energy Inc (SU.TO)

One of the premier plays in the Canadian Oil Sands. They took advantage of the downturn by increasing their ownership in Syncrude. This has to be a cornerstone of the energy part of any Canadian portfolio.

This has some of the best assets in Canada. Superb upstream/downstream assets. Very well financed. A strong balance sheet. If any company is positioned to take advantage of the problems inherent in the oil/gas industry, it is this company. Dividend yield of 3.2%.

He can’t say exactly when oil prices are going to make their move higher, but they are unsustainably low down here. It doesn’t mean that they can’t stay low for a while longer, but down here production can’t grow globally eventually, and that is going to come home to roost as demand grows. He likes this because most of its operations are in Canada. US refiners are getting bludgeoned right now because of a unique problem to the US called RINS (?). Dividend yield of 3.19%.

Recently bought this at around $34. He would treat this as a trader. We are not in a directional market for energy. If you looked at this as compared to the price of crude, you would see a pretty good 1 for 1 price trend. Wait to see what OPEC does next month, and just before they pull the trigger, you might want to trade out of it. You might get closer to $40.

They will grow the business 7% for the next 3 years. Oil prices are hard to predict.

Technically the stock is in a trading range, and has actually been underperforming the Toronto market for the last little while, so technically there is nothing to be excited about. Seasonally, the preferred period is from February to May of each year. It also has a brief period of seasonal strength from around the end of July to about the middle of September. The energy stocks that do best during this period are not the oily stocks, but they are the gassy stocks. Natural gas inventories are very high right now, so it may not happen this year.

SU-T is 28% of the index. As oil sells off, people flock to this one. The stock was inflated and now as it rebounds, the risk seeking money will move to other names. They just did a decent quarter based on refining gains.

(A Top Pick July 28/15. Up 8.92%.) He was playing defence on these 3 stock picks, just looking for a way not to get creamed.

Thinks that Fort Hills and Hebron are slated to come online next year. All indications are that those are well on track. What gives him a little pause is the outlook for downstream earnings, meaning the refineries. He is a little concerned about builds in diesel and gasoline inventories, and very high refinery runs, which could pressure crack spreads going forward.

He questions if energy prices are going considerably higher. Realistically energy production has become mass manufacturing. When you drill a hole today, you get a 99.8% chance of success. With that, capital is available if a company could hedge its production above the cost. He thinks it is very possible, around the cost of production, to see the price of oil stall out.

They have a massive operation that had to shut down due to wild fires. They raised capital and paid down debt on their balance sheet. Investors don’t understand the potential for free cash flow in the next year. It is quite powerful. It is a good hold here. Management says they could run the business as low as US$30 a barrel.

Great name. High quality. Has been quite negative on the energy space for 4-5 years now. However, this is one that he has recently added to his portfolios. If looking for a conservative way to start legging into energy, this company does that. Unfortunately, with everything that has happened with Fort Mac, they had to shut down projects. However, overall this is a name that is going to give you exposure to oil prices and the recovery that is slowly taking place. Pays a good dividend.

(A Top Pick July 29/15. Up 8.51%.) He still likes this. This is the benchmark of the Canadian energy market. When there is weakness in the stock, take it is a buying opportunity.

This is big and liquid. It is the Canadian oil company that Americans Buy when they want to come in. Not cheap. He feels that oil prices do work their way higher somewhat into the low to mid $50 a year out. If you want to be "cute", you could try to buy it at $35, which would be better.

It moved up right into May. After this period of seasonal strength it goes lower and it is doing so again this year. You may want to take some profits off the table. This is a high quality company, but you don’t necessarily want to own these companies for a long term.