Suncor Energy Inc (SU.TO)

Probably needs a minor correction after a huge run. It is well above its 40 week moving average. It could correct or just stop moving.

Has exceptionally good assets, great management team and increased dividends. You also have the advantage of refining capacity. It’s not just a matter of being able to extract heavy oil out of the ground, but you have to go through the processes of refining it. This company probably has some of the best operations in the country.

2^nd quarter numbers were not quite as strong as they could be. She bought more of this last week. Feels that there is a big free cash flow wall coming. Likes it at this price.

This is a much better company coming out of the recession. Likes what management is doing. They follow the Exxon model of returning capital to shareholders. Going to generate stable, stable returns going forward, as long as oil prices stay high.

Into a free cash flow distribution phase which will give them the luxury of having long reserve life mines and SAGD projects, producing a fair amount of free cash flow. The share buy back, and the dividends in the long term are what are going to help shareholders on their rate of returns.

He is not a big investor in oil sands. There are long lead times on projects. Prefers CNQ-T.

In the last 4 months, he has built a pretty significant weight in the heavy oil companies in Western Canada. The bottleneck in getting the bitumen and oil to market is starting to de-bottleneck a little. We produce about 4 million barrels a day, and by the end of this year will be moving about 800,000 barrels a day to the Gulf of Mexico. So the differential between Western Canadian heavy oil and WTI is narrowing, which is good for companies like this.

Stock has moved up, and they are doing a lot of the right things, but if you ever get a bottleneck problem on heavy oil, you could be into a bit of trouble. Prefers Canadian Natural Resources (CNQ-T) which has more international exposure.

Have done a good job of tightening focus over the last couple of years. Often uses this stock instead of being in cash. He does not feel like he needs to own Suncor at these prices, however.

Stock vs. Stock. CPG-T vs. SU-T. Likes the diversified asset base. Warrant buffet has taken a significant stake in SU-T. We should see more growth coming out of SU than CPG.

His model price is $81.93, a 95% upside.

Chart shows a little bit of stalling with the gap between $41 and $42. If we break there, we could probably go down to $38, possibly a 10% correction, but in the last little bit there has been a continuation that we should get higher. He thinks any downside would be at around $41.75 and the market would pick it up pretty quickly. He would Buy today and put a tight stop in at around $41.75.

Has a new CEO and have been raising the dividend. Focused on being more efficient. Still growing their oil sands operations, but are trying to be more efficient and return cash to shareholders. Have growing oil sands production and a good management team. Trading at around 7X Price to Cash Flow which is a reasonable entry point.

He uses some seasonality and some technicals when looking at stocks, but he doesn’t try to time the market. SU has had an incredible run. It is now starting to get into reasonable levels. Lots of Canadian energy plays have perked up. This is a fine entry point.

Stock had a pretty good run, especially after last quarter. One of the best oil sands producers in Canada. Has building growth. Management team has improved capital efficiencies and became more friendly to shareholders. In the near-term, they may have to consolidate a little bit. If you hold this, you will have increasing dividends and incremental growth. Thinks the next level will be $40-$45.