Suncor Energy Inc (SU.TO)

It is a ‘tomorrow’ stock. A year or three down the road, energy stocks will be better than they are now. Theirs is one of the safest dividends.

A great company. One of the first to get religion in terms of looking at things from a profitability standpoint and talking about free cash flow. That was a game changer. He used to own, but doesn’t anymore, mostly because of valuations. Also, thinks oil will probably pull back, especially as we get into the refinery turn around season, which should be starting shortly.

If you own this, you have actually done a lot better than oil and the other energy stocks over the last year, which doesn’t say much, but you’ve lost less money. The deal with the Canadian Oil Sands (COS-T) is a nice tuck-in acquisition with an asset they already own. You will have an increase in the dividends. If you are going to be in one energy stock in North America, this is the one you want to be in.

Energy is a sector he has avoided from July 2014 until towards the end of this January when we started to see some improvement. Over the next year or 2 there is going to be a lot of consolidation and a lot of companies that will go away. He probably has a half weight in the market. His main choice was Canadian Natural Resources (CNQ-T), but this company would fit in too. Wouldn’t have a problem owning this.

Relatively expensive and does extremely well, but over 2-5 years, the stock doesn’t look like it is going anywhere. When the market is going down, stock market players hide in this kind of stock because it holds up better than anything else, which is why the stock price did not go down. Ironically if oil takes off, all those people have to sell in order to buy stocks that have more torque. If you want leverage out of this oil price, it has to be something else. He is using it to get the yield, and thinks that incrementally it will grow over time and he’ll get his money at 7%-8%, but it is going to be very gradual. You won’t get any leverage out of this in the immediate run up of oil.

Given the run we have had, she would not be buying anything in energy right now. There is a possible pull back in crude. We are seasonally going into a period of refinery shut downs where inventory grows. It is a good name longer term.

This hasn’t suffered like the other energy companies because of their integrated operations. Chart shows a range that was formed in 2015, and we are now below that range, and we are at the resistance right now.

They just reported they are going to write off $2 Billion. The $20 model price does not include this. It is trading at book value so it is cheap compared to where it has been. We could have a trade to $35.58 or if it broke below his EBV level of $29 then sell.

With the COS-T agreement they reached today it will be quite accretive. He thinks there are more synergies than they told people about. They have the downstream assets to support the business and now they have the oil sands.

It is seen as a safe harbour. The COS-T acquision has been a bit of an overhang. It gives you a chance to buy. The balance sheet is in good shape. It is a great place to hide during this down turn.

Doesn’t like the Canadian energy sector. Has no idea where energy prices go, but if they don’t rise above $50, then companies like this have further downside to the stock price. An incredibly well-managed company and well financed, and will be a survivor.

In energy you want to buy the strong players, and in Canada this is the behemoth. It is an integrated company, so it gives you diversification. Owns wonderful assets and has a good balance sheet. Well-managed. The recent bid they made for Canadian Oil Sands (COS-T) illustrates that they are willing to be opportunistic. It could be a positive if they get it, but they don’t really need it. Dividend yield of 3.48%.

ZEO and ZEG probably outperform SU-T this year. SU-T will underperform as oil recovers.

(A Top Pick Dec 4/14. Up 2.87%.) Like most of the big majors, this has been very successful in lowering their costs. Secondly they have refineries and gas stations.

Has a 23% payout on a 3.1% dividend yield, which looks good. It is surprising to have an oil company with an expectation in earnings, going from $1.15 to $1.38 in 2016. If you want to play an oil turnaround in commodities, then this is a good opportunity.