Stockchase Opinions

Norman Levine Tourmaline Oil Corp TOU-T TOP PICK Jan 14, 2022

Believes company stock price has further room to grow. Best managed company in natural gas business. Sells a lot of natural gas into California market at a premium. Believes natural gas prices will remain strong (reduced drilling and growing economy). Additional dividend payouts and share buybacks are great for shareholders.
$45.310

Stock price when the opinion was issued

oil gas
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HOLD

Likes its heavier weighting to natural gas. His view continues to be that nat gas will be the preferred energy play going forward because of increased demand growth for LNG. Well poised to benefit from that. Global shift to cleaner forms of energy will continue, and that includes nat gas.

BUY ON WEAKNESS
For a short-medium hold.

Nice recent production and FCF beats. High-quality company. Diversified marketing portfolio. Are we in the sweet spot for natural gas as TMX starts to come online and Canada starts to export LNG? He thinks the answer is yes. Trading in line with peers, nice production and FCF growth. Balance sheet's in good shape. Nice dividend. Payout ratio is 90%, pretty safe.

Buy when down. Safe to put some $$ in right now.

BUY

Natural gas play, and a more stable way to provide energy for data centres.

PAST TOP PICK
(A Top Pick Mar 04/24, Up 9%)

Harks back to his view that total return is important. Natural gas is up ~50% from a year ago. With LNG Canada coming on, anticipates nat gas prices improving materially through the end of the year. Business fundamentals are best in class. CEO has been buying shares. Not a lot of flash, but they know what they're doing and keep growing earnings per share.

BUY

He focuses on the top third of relative price performers in a group. The best companies tend to keep getting better. Good dividend plus dividend growth.

TOP PICK

Despite the name, Canada's largest natural gas producer at ~13% of the total. Likes its capital discipline and lean operating efficiency. 21% stake in TPZ. Early mover to secure market access to delivery hubs on US and Canadian West Coasts. Consistently able to get higher pricing than peers. Generates lots of cash.

Cargo shipping from LNG Canada (as soon as this weekend) will benefit the whole sector. Kitimat project has potential to meaningfully shift supply/demand balance of Western Canadian nat gas, due to Asian demand. Yield is 3.10%, and there are special dividends too.

(Analysts’ price target is $76.61)
TOP PICK

It's actually natural gas ;)  There's an incredibly low gas price, as there's just too much gas in the system. There's an idea that by 2026, there might actually be a tighter gas market for the first time in a long time. Special dividends equivalent to the current yield. Collect your dividends and wait for that catalyst. Incredibly successful Canadian story. 

We're now exporting gas to other countries. Highest-quality company he can find while he waits for the catalyst to kick in. Yield is 3.2%.

(Analysts’ price target is $76.76)
HOLD

Lots of optimism about the future of LNG in both Canadian and US natural gas stocks. Remember though, we're in the middle of July and that's not generally a friendly time of year for these companies. No fundamental issue. Doesn't see gas prices being broken. Give it a bit of space. As we get closer to fall, if you have time, you're probably in good shape.

BUY

His firm really likes the producers. Good company. Quite bullish on nat gas, and it should translate to the producers over time (with some lag).

BUY

Good time to buy. He bought in last month or so. Very good operator. Secret sauce is that it has the best drilling inventory, many decades worth. Largest nat gas producer in Canada, about 13-14%. Owns much of its own infrastructure, which gives them operational flexibility. Smart about diversifying away from a single access point for delivery. Shareholder friendly. Importantly, CEO is a very large shareholder.