Suncor Energy Inc (SU.TO)

If you are going to own only one large cap energy company in Canada, it should probably be this one. You’ve got the vertical integration working for you. Nobody is building refineries. They’ve got retail outlets and, of course, a lot of production. Have a very long lived resource in the oil sands. Their production and efficiency keeps improving. Still attractively priced. The cloud hanging over the company is of course transportation. We have all learned that rail transport is not a great solution and pipelines are vastly to be preferred. That oil will get to market one way or another. He feels the fair value is in the mid-$40s. If there was a solution on the Keystone pipeline, that would help.

One of his largest holdings in the oil and gas sector. The largest Canadian company. Exposure to conventional, oil sands and downstream operations. Sees potential for increased dividends. Recommends it, even at today’s valuation.

They are still suffering from the Western Canadian Oil price. Bought it last summer, but thinks he can get 8-10% rate of return. Were struggling when they bought PetroCan. The stock has not gone anywhere, but they have done an awful lot of fixing internally. Now you are just entering a period where you have free cash flow with nothing to do with it. He thinks he can capture the dividend and a couple of dollars of share price appreciation by year end. It is in great shape for a long term hold.

A short term active trader can chase this. The spike in energy prices does not get reflected in the energy stocks. Energy stocks are range bound and so should be sold on strength.

A cash generating machine. Will have to spend some money in the future and will eat up some of the cash that could come back to shareholders. Prefers CNQ.

He likes it longer term but would like to see great production increases which will come when oil is shipped by rail or pipeline. He would avoid it until then.

Nothing wrong with it. CNQ has been outperforming everybody. The big seniors like SU have been on the shelf recently partly because of pretty steady selling by people convinced that production of oil is going to swamp the price, like Gas going from $6 to $2. He thinks this theory is wrong. We have huge imports that we can stop. Thinks WTI will go up and beat Brent.

Feels the story is “Grow” but not at any price. This has been the case for some time. Doing a good job of transforming this. It will take a little time to see it grow, but looking at what it is free cash flowing, about $8 billion per year, no one else can compare. He would think 10% upside would be very reasonable.

Husky (HSE-T) versus Suncor (SU-T)? He wouldn’t go to either one of these if he wanted to optimize his heavy oil exposure. Both of these are in the refining business and refiners are great when crude prices are low and gasoline prices are high. Thinks we are entering a period where the inverse may potentially happen so there will be compression on the refining margins.

Came out with their guidance recently with growth not that high (about 4%). And with similar dividend it is about 8% total return. In April 2011 he advised getting out of resource and has only recently advised getting back in.

Is this a good one for a TFSA? One of the issues that you always run into with energy names is that they are cyclical in nature. You could go quite some time with a sideways movement. This would not be his top pick for a TFSA. He would rather have a non-cyclical good dividend paying company that runs smoothly with low volatility.

In a trading range. You are looking for a move above the range, which would be a buy signal.

(Market Call Minute) Buffet likes it. The defecto integrated oil sands growth. Subdued growth.

He is not that enthusiastic about any of the stocks this week. Over the last 4-5 years he sees much more cost discipline. Thinks he can get something from this big stable company.

Hasn’t owned this for quite some time. A great story once you are a bit further down the way in terms of the East-West pipeline and the potential incremental refining in Montréal, and perhaps further east. Very cheap at 5X cash flow but his current problem is that he doesn’t see much growth over the next year or 2. If it took a hit for some reason, then he would be a buyer.