Trican Well Service Ltd. (TCW.TO)

(A Top Pick March 23/17 - Down 16.4%.) This is outer stupidity. Talk later about this.

100% Canadian name. Trading at 2.9 times EBITDA. Trading at 20% free cash flow yield. 80% of their business is based off of strong WTI pricing on condensate. Difficult to explain when shares are down 30%. (Analysts’ price target is $6.40)

Last year we formed a base and now we are heading down to it. These businesses can do extremely well if the energy sector picks up. $3.20 would be a place to step in.

He likes this because it has torque, and it is trading at a very cheap multiple. The fracing business in Canada has really been consolidated and is far less competitive than in the US. Trading at a very low valuation of about 3-3.5 times enterprise value to EBITDA. Has a really good balance sheet and will be generating free cash flow this year. This doesn't have any balance sheet concerns. (Analysts' price target is $6.50.)

The services companies are collectively quite cheap by multiple and so is the whole energy E&P sector. Western Canadian Select has not moved as have other oil prices. If you had US exposure that would be better because then you would have un-trapped oil. Pipelines will not fix this for a couple of years.

He likes it. It is a long in three of his funds. It has good valuation. There is one particularly large seller and that has held back the price. He would like to see it stronger, but all of its peers are picking up good momentum. 16 times PE and a really solid balance sheet. It should get a pop when the last of the selling clears up.

(A Top Pick Jan 31/17. Down 16%.) Thinks the frac market, both in Canada and especially in the US, is and will remain undersupplied. There is very good upside in this.

Extra service names are absolutely where the best risk/reward opportunities are. He's specifically focused on the fracers both Canada and the US. This is an area where pricing power remains very strong. Canada's ECO pricing is impacting pricing power, but he sees it sticking. Believes both Canada and the US will be undersupplied for pressure pumping for all of 2018, and likely heading into 2019 despite the concerns of weak natural gas prices. This company gives you almost pure exposure in Canada. You are paying a multiple that is about half its historical average because of this worry of overcapacity in Canada. He doesn't believe in that thesis. Sees about 50% upside in the shares. (Analysts' price target is $6.50.)

Just took over Canyon Energy Services. The company does fracing pressure pumping with fluids to crack the rocks to get the hydrocarbons out. These companies are poised to have a pretty good year in 2018, especially as oil prices are perking up. It looks pretty good going into the new year, but you are vulnerable to a collapse in oil prices with no dividend to back you up.

Over the last 2 years, the chart looks fairly promising in an up channel, but there is a big overhead supply going back over time. The stock is going nowhere, and will probably go sideways from here. There are probably better things to do.

He thinks it is should be bought in Q1 after a possible back off in oil. They have debt but shares in a US operation that offsets the debt. They had a fabulous quarter. It bottomed in early 2016. The balance sheet is now clean and they could make acquisitions. A non-compete clause with an acquisition expires in 2018.

This gives you pure Canadian exposure in a market that is undersupplied. In their conference call, they said they had visibility through to break up, which would be Q2. All their equipment is spoken for through all 2018.

It is flat but had a bit of a recovery with the whole group. If he was going to play this group he would choose this or one other. He wants to see another quarter (first week in Feb) and that may be when he gets back in.

Came off dramatically as oil prices came off in 2015-2016. He typically doesn’t like oil services or energy related stocks, simply because they don’t have the ROE profile he is looking for. Would prefer Pason Systems (PSI-T) or Badger (BAD-T) instead.

Pricing is going up and demand is nearing a record high. They are at 100% utilization of all the equipment that they can man. They have demand for 3 more spreads, and can’t find people to actually work on it. This shows how tight this market is at a fairly crappy commodity price, where you have weak gas prices. Thinks this stock next year, can EBITDA $300 million. Trading at 4X EV to EBITDA on 2018, where it usually trades at 7 or 7.5 times, so still sees it as a $6-$7 stock. He likes this company very, very much.